Posted by: Greg Ness | February 8, 2016

IaaS Cloud War is a Tennis Match

Seattle: From a Jobs Shortage to a Housing Shortage

In 1971 an iconic billboard went up south of Seattle, across the street from a cemetery: “Will the last person leaving Seattle – Turn out the lights.”  Within a month The Economist called Seattle a City of Despair.

Less than a decade later things would start to change, and set the stage for a boom of historic, global proportions. A small startup named Micro-soft relocated from New Mexico. Over the following decades the software-centric economy led to massive economic growth.  Seattle by 2014 would be among the nation’s fastest growing cities.

[Aug 25 2016 update: See this Geekwire article on Seattle as the cloud city.]

Today the once dismal city is now at the center of an even larger and potentially more profound boom; a boom large enough to threaten the livelihoods of some of the most established and powerful tech companies, many of whom are located in Silicon Valley.

When Microsoft Azure CTO Mark Russinovich came to Silicon Valley I joined him for coffee (at a [Seattle-based] Starbucks, nonetheless) to catch up since our last discussion, which led to my earlier blog: The New Microsoft and the New Cloud.

We had a short chat about the future of tech, especially the ongoing churn and consolidation ahead for traditional tech hardware companies as the cloud goes mainstream. Mark predicted that one of the biggest surprises in the next 3-5 years will be a shift to cloud within companies which are today anti-cloud.

He sees the regional and 2nd tier financial services players leading in cloud adoption and pressuring the more established players with greater agility and better performance. In addition, Mark predicted explosive cloud adoption growth in 2016.

“It’s too late for cloud washing,” Mark advised when we talked about one of the recent mergers of traditional tech companies.

IaaS Cloud War is Sizing Up Like a Tennis MatchFINAL

Tennis as the Cloud War Metaphor

Mark offered an interesting analogy for the cloud war.  Instead of a horse race it would play out more like a tennis match, with two powerful companies (both based in Seattle) absorbing most of the growth while other players are marginalized. (I immediately thought of Ellison’s role in the revitalization of US tennis, especially in Indian Wells.  He might be the first to fully understand the metaphor.)

At this point it’s hard to disagree.  Azure’s global OS footprint and stack consistency, dark fiber connectivity and focus on hybrid cloud deployment and portability put it in a very powerful, enterprise-friendly position.  Microsoft’s shift from being software-centric to cloud-centric is truly remarkable and will likely be taught as a case study in business schools for decades to come.

That leaves perhaps a dozen cloud players outside of Seattle on notice, most notably Oracle, Google and VMware. VMware could bring an interesting dimension to both Oracle and Google. With Diane Greene now leading Google’s cloud business, she could have a Steve Jobs-like return to the helm of the company she successfully led for a decade.

If Mark is correct, then they might have 12-24 months to make it a doubles match. Otherwise it looks very likely to stay a singles game, at least for the foreseeable future.

Getting in the game will require a deeper connection between IaaS vendor APIs and premise-bound workloads.  That brings us back to the role of software (versus cumbersome, costly and risky manual scripts and configs) in accelerating growth in the enterprise market.  Think automated cloud migration and cloud recovery.

The rise of Seattle as an economic miracle enabled by a shift to software and the consolidation of tech hardware-focused players (starting with mainframes, then servers and network gear) poses a disruptive shift for many of the old guard in Silicon Valley.  A new generation of cloud software and security players will become global tech brands while the big brands of today consolidate for mere survival.

Doubles anyone?


Responses

  1. http://seekingalpha.com/article/2684235-amazon-declares-war-on-vmware

  2. […] few weeks ago I talked about the cloud tennis match between Amazon (AMZN) AWS and Microsoft (MSFT) Azure, inspired by coffee with Azure CTO Mark […]

  3. […] Seattle: From a Jobs Shortage to a Housing Shortage In 1971 an iconic billboard went up south of Seattle, across the street from a cemetery: “Will the last person leaving Seattle – Turn out the lights.” Within a month The Economist called Seattle a City of Despair. Less than a decade later things would start…  […]


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