What’s the big deal about
cloud computing?
© Dan Reynolds
Vishy Venugopalan · Longworth Venture Partners · @midtownninja

About me
Analyst at Longworth Venture Partners
Prior Lives
• Infrastructure software analyst at The 451 Group
• Software engineer, Morgan Stanley

Everything old is new again…

… or is it?

Cloud computing buzz
4500% in
18 Job postings mentioning “EC2”
months
Amazon.com vs AWS network bandwidth over time

So what is cloud computing?

And why the buzz?
Source: UC Davis networking documentation from 1998
Photo credit Gerard Casey, Rob Graham, Paul Loebig
credit:

Cloud computing on- is a model for enabling convenient,
demand shared pool
network access to a of configurable
computing resources (e.g., networks, servers, storage, applications, and services) that can be
rapidly provisioned and released with
minimal management effort or service provider
interaction.
-- NIST Cloud Computing Project

A (very) brief taxonomy
• Software as a Service
– $21bn by 2012 (20% CAGR)
• Platform as a Service
– $9bn by 2012 (160% CAGR)
• Infrastructure as a Service
– $4bn by 2012 (60% CAGR)
Sources:
Sources AMR, Gartner, IDC, William Blair & Co.

© teri-hatcher.com
But is the market real?

The market is real and spectacular
Strong on-ramp for New kinds of
existing applications applications
70
Projected cloud computing
60 spend
50
40
$bn
30
20
10
Credit: UC Paleontology Museum + Nat’l Center for Science Education
0
2008 2009 2010 2011 2012
Smaller Enterprises Larger Enterprises Cloud = IT’s Cambrian Explosion
--Irving Wladawsky Berger
Source:
Source IBM, Enterprise Cloud Summit 2009

This is how startups
see the cloud
Copyright holder unknown
© Disney
This is how large enterprises
see the cloud

Killer apps for the cloud (so far…)
• Web applications
• Batch jobs
– Scientific computing
– Rich media processing
• Test+dev and one-off
projects
• Getting out of the business
of IT
Credit: Geek and Poke

So why should startups
be excited?

Cloud as new business enabler
• Low user friction
• Internet standard abstractions
• Easy client access
• Potential cost savings (?)

What’s so cool this time?
Economies of scale
+ Low user friction
+ Ease of integration
Opening up the SMB IT opportunity?

What’s so cool this time?
Openness &
network effects
Giant market
opportunity
No single winner

Summary
• Cloud computing is a tectonic shift and it’s real
• There are many issues yet to be worked out
• The cloud enables new apps and new business
models
• The cloud’s inherent openness encourages
innovation
• The cloud’s unique characteristics might open up the
SMB market

Resources
• NIST Cloud Computing Project
• McKinsey and Berkeley reports on cloud computing
• Intuit Partner Platform
• Everyone who’s here!

Thank you!
Vishy Venugopalan
vishy@longworth.com
@midtownninja