The document discusses how web-scale clouds have become dominant over legacy clouds due to their lower costs and ability to support new applications. It argues that carriers missed an opportunity with cloud computing because they focused on expensive, complex legacy clouds rather than agile web-scale clouds. However, carriers still have advantages like networks and mobile expertise that could be leverized by adopting a web-scale approach. The key is for carriers to seize the opportunity now before they lose more ground to cloud pioneers like AWS.

2. The Public Cloud Has Won
Web-scale clouds are happening now ...
don’t be left in the cold
Randy Bias @randybias
Jun 27th, 2011 @cloudscaling
eComm - SFO

3. Mobile
Matters

4. Mobile Apps Exploding
Sources: Asymco.com, Chetan Sharma, Morgan Stanley

5. Mobile +
Cloud

6. Two Sides of the Same Coin
Consumption Production

7. Two Sides of the Same Coin
Consumption Production

8. Carriers
Know
Mobile

9. Carrier Advantages

10. Carrier Advantages
IP backbone

11. Carrier Advantages
IP backbone
Wireless network

12. Carrier Advantages
IP backbone
Wireless network
CO & DC footprint

13. Carrier Advantages
IP backbone
Wireless network
CO & DC footprint
Mobile/IP CDN

14. Carrier Advantages
IP backbone
Wireless network
CO & DC footprint
Mobile/IP CDN
In-country expertise

15. Carrier Advantages
IP backbone
Wireless network
CO & DC footprint
Mobile/IP CDN
In-country expertise
Billing/micro-payments

16. Carriers
Don’t Know
Cloud

17. First Gen Carrier Clouds

18. First Gen Carrier Clouds
“Enterprise” not “web-scale”

19. First Gen Carrier Clouds
“Enterprise” not “web-scale”
Expensive & Complex

20. First Gen Carrier Clouds
“Enterprise” not “web-scale”
Expensive & Complex
NOT Agile

21. First Gen Carrier Clouds
“Enterprise” not “web-scale”
Expensive & Complex
NOT Agile
Focus on IT buyer

22. First Gen Carrier Clouds
“Enterprise” not “web-scale”
Expensive & Complex
NOT Agile
Focus on IT buyer
Virtualization 2.0, not cloud

23. First Gen Carrier Clouds
“Enterprise” not “web-scale”
Expensive & Complex
NOT Agile
Focus on IT buyer
Virtualization 2.0, not cloud
Bottom Line Focus

24. First Gen Carrier Clouds
“Enterprise” not “web-scale”
Expensive & Complex
NOT Agile
Focus on IT buyer
Virtualization 2.0, not cloud
Bottom Line Focus
Looking back, not forward

25. Cloud Value
Prop

26. Which Value Prop Matters?
Bottom line Top line revenue
vs.
cost savings generation

27. Which Value Prop Matters?
Bottom line Top line revenue
vs.
cost savings generation
ASP vs. SaaS

28. Web-scale
Clouds

29. Web-scale Cloud Pioneers

30. Web-scale vs. Legacy App Focus
vs.
Greenfield &
Legacy Apps
Mobile Apps

31. Enterprises use Web-scale Clouds for
Greenfield & Mobile Apps

32. Enterprise Mobile Apps

33. Estimated IaaS Growth Rates
Web-scale vs. Legacy Cloud
88%
90%
68%
45%
23%
20%
0%
Web-scale
Legacy
Source: Cloudscaling market analysis

34. Bookseller in Top 10 IT services by 2016?
1 IBM $37,347
2 HP $34,678
3 Fujitsu $26,935
4 CSC $16,281
5 Accenture $15,555
6 Capgemini $11,255
7 Hitachi $11,050
8 Ericsson $11,031
9 AWS $10,465
10 NTT Data Corporation $10,425
Source: servicestop100.org - 2010 top 100 IT services businesses by service revenue

35. Comparing
Clouds

36. Capital Expense (Initial)
Web-scale vs. Legacy Cloud
$4,000
Cost per Sellable $3,216
‘VMU’ $3,000
(m1.small, 1.7GB $2,000
RAM, 1 vCore)
$1,000
Web-scale $382
Legacy $0
Source: Cloudscaling confidential financial models for IaaS clouds

37. Operational Expense (Labor)
Web-scale (1500:1) vs. Legacy (300:1)
Servers : IT Headcount
$150M
$113M
$75M
$38M
$0M
Year 1 Year 2 Year 3 Year 4 Year 5
Web-scale Legacy
Source: Cloudscaling estimates of VM:admin based on known IaaS deployments

38. Legacy 5-yr TCO is 3-5x
more than Web-scale ...

39. ... doesn’t provide 3-5x
value for greenfield or
mobile apps

40. Legacy Clouds Reduce TAM
App
Developers
Long Tail of
Customers
SMB
In-country
Enterprises
Enterprise
In-country Global

41. Legacy Clouds Reduce TAM
App
Developers $
Long Tail of
Customers
SMB
In-country
Enterprises
Enterprise
$$$$$In-country Global

42. Mobile
Apps on
Clouds

43. 250M+ Users, 25M DAU
Public AWS for launch, dev, scaling, & test
Private web-scale “Z-Cloud” for base

44. Studio Model

45. Studio Model
No way to predict winners

46. Studio Model
No way to predict winners
Build 10: 3 win, 3 fail, and 4 languish

47. Studio Model
No way to predict winners
Build 10: 3 win, 3 fail, and 4 languish
Model: Launch,Measure,Triage

48. Studio Model
No way to predict winners
Build 10: 3 win, 3 fail, and 4 languish
Model: Launch,Measure,Triage
Optimize costs before, during, & after

49. Own the Base, Rent the Spike
1
Launch & Measure
Traffic
App Workload
Sources: Graphics from Everest Group, Inc.

50. Own the Base, Rent the Spike
Move Base
2
to Z-Cloud
App Workload
Sources: Graphics from Everest Group, Inc.

51. Own the Base, Rent the Spike
3
Keep Spikes
on AWS
App Workload
Sources: Graphics from Everest Group, Inc.

52. Own the Base, Rent the Spike
4
PROFIT!
Sources: Graphics from Everest Group, Inc.

53. Take Aways

54. Take Aways
Studio model drives cloud choice

55. Take Aways
Studio model drives cloud choice
Cost matters & web-scale delivers

56. Take Aways
Studio model drives cloud choice
Cost matters & web-scale delivers
“Hybrid” works when clouds interop

57. Why Did
Carriers
Miss?

58. “It’s not our target market”

59. “It’s not our target market”
Except that, enterprises:

60. “It’s not our target market”
Except that, enterprises:
Use web-scale clouds

61. “It’s not our target market”
Except that, enterprises:
Use web-scale clouds
Make mobile apps

62. “It’s not our target market”
Except that, enterprises:
Use web-scale clouds
Make mobile apps
Host app back-ends on AWS

63. “The market isn’t big enough”

64. “The market isn’t big enough”
Except that:

65. “The market isn’t big enough”
Except that:
AWS will be 1B in rev in 2011

66. “The market isn’t big enough”
Except that:
AWS will be 1B in rev in 2011
> all global ‘legacy cloud’

67. “The market isn’t big enough”
Except that:
AWS will be 1B in rev in 2011
> all global ‘legacy cloud’
100% CAGR

68. “The market isn’t big enough”
Except that:
AWS will be 1B in rev in 2011
> all global ‘legacy cloud’
100% CAGR
Carriers trying web-scale now

69. Bottom Line

70. Bottom Line
Massive Disruption

71. Bottom Line
Massive Disruption
Legacy cloud biz model is stillborn

72. Bottom Line
Massive Disruption
Legacy cloud biz model is stillborn
Carriers have inherent advantages

73. Bottom Line
Massive Disruption
Legacy cloud biz model is stillborn
Carriers have inherent advantages
Web-scale + Carrier advantage = Win!

74. Bottom Line
Massive Disruption
Legacy cloud biz model is stillborn
Carriers have inherent advantages
Web-scale + Carrier advantage = Win!
Carpe Diem