Hybrid Cloud Will Be a Battlefield & Other Cloud Predictions

Amazon will face major competitive threats in 2017 in hybrid cloud, AI and maybe blockchain.

Mitch Wagner, Executive Editor, Light Reading

January 2, 2017

7 Min Read
Hybrid Cloud Will Be a Battlefield & Other Cloud Predictions

Amazon had better watch its flank in 2017. Enemies are looking to break Amazon Web Services from its global domination, and hybrid is the battlefield on which these valiant warriors will make their stand.

In other news: I've been learning about military history. Sometimes I get carried away with the metaphors. I'll tone it down.

Amazon Web Services Inc. has overwhelming domination of the Infrastructure and Platform as a Service (IaaS and PaaS) markets, with a 45% share of worldwide public IaaS, even though Microsoft Corp. (Nasdaq: MSFT) and Google (Nasdaq: GOOG) are growing faster. AWS is more than twice the size of Microsoft, Google and IBM Corp. (NYSE: IBM) cloud combined. (See Amazon Bigger in IaaS Cloud Than Microsoft, Google & IBM Combined.)

But AWS's competitors are global companies in their own right, with long histories of serving the enterprise market, where Amazon is the newcomer.

Microsoft has 20 years of experience selling into the enterprise, and it's easy for companies to extend their relationship with Microsoft from on-premises computing to Azure.

IBM has the same advantage but more so. IBM makes Microsoft look like a newcomer to the enterprise. IBM's history in the enterprise isn't measured in years -- it's measured in generations.

And Google is, well, Google. It's got a globe-spanning cloud, advanced technology, its brand is worshipped and its ambitions are enormous -- not only taking on Amazon, Microsoft and IBM, but also turning the auto industry upside down with self-driving cars, revolutionizing the energy industry by getting power from sea water and Google's founders are looking to literally beat death.

2017 is the year that challengers Microsoft, Google and IBM, along with a throng of service providers and niche cloud players, look to get a piece of AWS business, or even take Amazon down. In the process of doing that, they'll revolutionize enterprise computing and the business world.

Look for three unfolding stories here, in hybrid cloud, AI and blockchain:

Hybrid cloud is the new battleground
Sirish Raghuram, CEO of Platform9, a managed services provider for OpenStack and Kubernetes, suggested this angle, and it makes sense. Hybrid is a natural bet for Microsoft and IBM, just extending their existing business relationship to the public cloud.

It's also a way for Google to make inroads into the enterprise cloud. Google's strength here is Kubernetes, open source software championed by Google which makes workloads cloud-independent. Anything that weakens Amazon's lock on customers is good for Google, Raghuram says.

"Kubernetes creates a halo effect for Google," Raghuram says. "Google has small market share, so any way they can commoditize Amazon -- even running Kubernetes on Amazon -- helps Google. And Google has a great Kubernetes implementation."

Similarly, next year, Microsoft's Azure Stack is due to come to market, allowing enterprises to run Azure instances locally in their data centers, strengthening Microsoft's already strong hybrid story.

Amazon isn't standing still. Late this year, Amazon cut a deal with VMware Inc. (NYSE: VMW) to allow VMware to extend its vSphere private cloud platform into AWS. (See Enemies No More: Amazon & VMware Partner on Cloud.)

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And Amazon introduced Greengrass software and Snowball hardware this month to beef up its hybrid cloud technology. (See Amazon Takes Cloud on the Road.)

AI is a big gun
One of the signal benefits to the cloud is that it lets enterprises of all sizes try cutting-edge technologies that would otherwise only be available to a handful of the biggest companies in the world. The cloud provider builds and runs the service, and enterprises just have to connect applications with APIs.

AI is new technology, and it's an opportunity for insurgent cloud providers to gain the lead over AWS. The market is so new that nobody's the leader here -- not AWS or anybody else.

Next Page: Blockchain: A Crazy Super-Weapon

Google sees machine learning and AI as integral to its future, for voice, image recognition and natural language processing. (See Google Minds Machine Learning.)

Microsoft has a 5,000-person group focused on on AI, and partnered with OpenAI, a nonprofit AI research group whose founders include Tesla Motors' Elon Musk. It's making tools available for developers to build, connect, deploy and manage intelligent bots. (See Hypercloud Guys Make Big AI Push.)

And IBM of course has Watson, part of the "strategic imperatives" it's counting on to lift the company up while its legacy business declines. Other strategic imperatives are cloud, analytics, mobile and security. (See Cloud Rises But Overall Revenue Down for IBM.)

As with hybrid cloud, Amazon isn't sitting still; its Alexa AI-powered digital assistant is making itself at home in kitchens everywhere. (See Amazon Unlimited, Alexa, AI & How to Cut Off Google at Its Knees .)

Additionally, Amazon offers a line of AI services to developers for natural language understanding, automatic speech recognition, visual search and image recognition, text to speech and machine learning.

Blockchain: A crazy super-weapon
Blockchain is the technology underlying bitcoin, but it can be used for a plethora of applications. Blockchain is a distributed ledger, it keeps a permanent record of all transactions entered into it, not under the control of a single central authority such as a bank or government. And it's immutable; transactions can't be altered or erased.

Remember the "permanent record" that your schoolteachers warned you about? That's blockchain.

The decentralized, immutable nature of blockchain is what makes it great for bitcoin; it provides a fully distributed means of keeping track of who owns which bitcoin, and who gave which bitcoin to who and when. But blockchain can be used for any kind of transaction -- and that's what has advocates excited.

Like AI, blockchain requires a complex infrastructure, and cloud providers are naturals to take that on. Microsoft offers Blockchain as a Service on Azure. IBM offers blockchain on its cloud. Google is working with the Royal Bank of Scotland Group on blockchain and backing blockchain startup Ripple. And AWS launched a blockchain playground for developers in the spring.

So far, the most practical emerging applications for blockchain are international financial transactions. Some of that is big business -- international banking and cargo shipping.

And some of it is small scale, like migrant workers sending money home from their jobs in developed nations to their families in the developing world. Small transactions like that can add up to big money when you have millions of them.

Big or small, these kinds of transactions are slow, requiring multiple intermediaries who each require a financial cut, and are ripe for disintermediation to improve speed, agility and reduce costs.

That's got big banks interested in blockchain. IBM estimates 15% of top banks will roll out blockchain projects this year. But not without difficulty.

Beyond financial transactions... well, the revolutionary properties of blockchain seem like a lot of handwaving. Something about Internet of Things and something else about revolutionizing corporate governance. Blockchain attracts the kind of people with poor personal hygiene and unkempt beards who dream about the day central banks and governments fall and they can take their rightful place at the top of society.

So I'm a blockchain skeptic.

On the other hand, I'm the guy who thought cameraphones didn't have a future. My fortunetelling record isn't great. I'll be watching blockchain closely, hoping to be proven wrong.

— Mitch Wagner, Follow me on TwitterVisit my LinkedIn profile, Editor, Light Reading Enterprise Cloud

About the Author(s)

Mitch Wagner

Executive Editor, Light Reading

San Diego-based Mitch Wagner is many things. As well as being "our guy" on the West Coast (of the US, not Scotland, or anywhere else with indifferent meteorological conditions), he's a husband (to his wife), dissatisfied Democrat, American (so he could be President some day), nonobservant Jew, and science fiction fan. Not necessarily in that order.

He's also one half of a special duo, along with Minnie, who is the co-habitor of the West Coast Bureau and Light Reading's primary chewer of sticks, though she is not the only one on the team who regularly munches on bark.

Wagner, whose previous positions include Editor-in-Chief at Internet Evolution and Executive Editor at InformationWeek, will be responsible for tracking and reporting on developments in Silicon Valley and other US West Coast hotspots of communications technology innovation.

Beats: Software-defined networking (SDN), network functions virtualization (NFV), IP networking, and colored foods (such as 'green rice').

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