Siggraph06

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The business of cloud and utility computing. Breaking the technology link by tieing pricing to end user value

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Siggraph06

  1. 1. Grid Utility Technology Drivers Enabling New Business Models July 30, 2006 Paul Kamp GridInstitute Fellow paul.kamp@gridinstitute.com
  2. 2. Technology Context – The Net Effect For a given cost, performance improves over time Performance 1,000,000X Net Effect Metcalfe’s Law 100,000X Gilder’s 10,000X Law Moore’s 1,000X Law 100X 10X 1X 1980 1990 2000 Time Page 2 Sun Proprietary/Confidential: Internal Use Only MediaGrid Summit July 30, 2006
  3. 3. Business Context – The Net Effect For a given performance level the cost to deliver a solution decreases over time Cost $/Unit of Performance Performance 1,000,000X 1$ 100,000X Cost to Deliver a 1/10$ 'Solution' 10,000X 1/100$ 1,000X 1/1,000$ 100X 1/10,000$ 10X 1/100,000$ 1X 1/1,000,000$ 1980 1990 2000 Time Page 3 Sun Proprietary/Confidential: Internal Use Only MediaGrid Summit July 30, 2006
  4. 4. Example solution – iTunes Music Store (iTMS) Bricks and Mortar distribution - Vinyl 45 RPM record Artist Record Label Point of Sale Performing Artist Content Creation Promotion Local Record Store Inventory Songwriter Manufacturing Distribution Page 4 Sun Proprietary/Confidential: Internal Use Only MediaGrid Summit July 30, 2006
  5. 5. Example solution – iTunes Music Store (iTMS) Bits and bandwidth distribution – iTunes Music Store Artist Record Label Point of Sale Performing Artist Content Creation Promotion Online Music Store Songwriter Manufacturing Inventory Distribution Page 5 Sun Proprietary/Confidential: Internal Use Only MediaGrid Summit July 30, 2006
  6. 6. Business Model – Increasing GM's Over Time Cost to deliver service decreases faster than price Cost $/Unit of Price Price for Service that Performance Technology is Delivering $1,000,000 1$ GRO $100,000 Cost to Deliver SS MAR 1/10$ $10,000 the Service GINS 1/100$ $1,000 1/1,000$ $100 1/10,000$ $10 1/100,000$ $1 1/1,000,000$ 1980 1990 2000 Time Page 6 Sun Proprietary/Confidential: Internal Use Only MediaGrid Summit July 30, 2006
  7. 7. Utility and Application Delivery Chain Enabling the digital economy Utility Computing Grid Distribution Applications Engine – Computer Center Online Record Store Delivery mechanism Provisioning Utility Metering Direct Marketing Monitoring Application Metering Page 7 Sun Proprietary/Confidential: Internal Use Only MediaGrid Summit July 30, 2006
  8. 8. The Transition from Atoms to Bits “The change from atoms to bits is irrevocable and unstoppable. Why now? Because the change is also exponential - small differences of yesterday can have suddenly shocking consequences tomorrow.” Nicholas Negroponte Being Digital Page 8 Sun Proprietary/Confidential: Internal Use Only MediaGrid Summit July 30, 2006
  9. 9. A Few Additional Examples ● Tivo – Service wrapped technology ● Constant Contact – Direct Mail marketing ● Shutterfly, Kodak – Digital film development and prints ● Starbucks – Internet Access as a utility . . . – Reseller of T-Mobile bandwidth Page 9 Sun Proprietary/Confidential: Internal Use Only MediaGrid Summit July 30, 2006
  10. 10. A Few Proposed Media Examples ● Digital Distribution of Film – In 2003 the film industry spent $631M on physical reels of film for US distribution ● Internet based distribution of radio – Save on Satellite time ● Digital Rendering of Film – Why buy the hardware when you can rent it ● Virtual Medicine – Telepresence – Medical Imaging Page 10 Sun Proprietary/Confidential: Internal Use Only MediaGrid Summit July 30, 2006
  11. 11. Summary Recommendation – Next steps ● Rethink your business model to take advantage of the new modes of distribution and product development – Define Partners, customers, delivery mechanism, that change the industry dynamics – Application pricing must be in customer and solution terms ● Particpate in industry forums to enable the new business model – Join the Quality of Service Technology Group (QOSTG) ● Identifier: grid.qos ● Web site: http://mediagrid.org/groups/technology/grid.qos ● Email list: grid.qos@lists.mediagrid.org – Join the Grid Gateway Technology Group (GGTG) ● Identifier: grid.gateway Page 11 ● Sun Proprietary/Confidential: Internal Use Only Web site: http://mediagrid.org/groups/technology/grid.gatewayJuly 30, 2006 MediaGrid Summit

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