Where Does Rackspace Go From Here?

In the past week, the conversation around cloud computing has pulled the spotlight toward Rackspace (NYSE: RAX). Today alone, the stock is trading up 20%. So, why all attention in an otherwise mixed field of great innovators and steady stalwarts? A story in the Wall Street Journal suggests that Rackspace has hired Morgan Stanley to help evaluate options.

That story alone has generated a considerable amount of fodder on the blogosphere and Twitter streams. In addition, there was considerable chatter at this week’s OpenStack Summit in Atlanta.

Internal Competition

Rackspace’s historical ‘bread and butter’ comes from managed hosting and their legendary fanatical support. Then comes along cloud computing, Rackspace’s cloud offerings and a few acquisitions. The problem is that their traditional hosting services and cloud offerings could easily compete with each other. While some will quickly deny this point, the reality is that enterprises moving up the value chain will inevitably move from traditional managed hosting services to cloud offerings. The challenge is that the revenue and cost model for each is very different. In essence, the shift from managed services to cloud offerings will create a drop in revenue without further augmentation in either new customers or additional services.

The OpenStack Factor

Rackspace was an early, and significant, contributor to OpenStack. OpenStack is open source software that presents a strong contender for companies looking to build private and public clouds. In the past 6-12 months alone, OpenStack has received significant support from across the technology industry.

As an early supporter and major contributor to OpenStack, Rackspace got tagged as playing a heavy-handed role in controlling OpenStack’s development. Right or wrong, at the time there was a dearth of corporate leadership at the level Rackspace was playing. So, Rackspace pulled back and others quickly filled in. The question being posed is: Did Rackspace potentially pull back too far?

Today, the picture is quite a bit different. There are a number of major technology companies that have embraced OpenStack and are significant contributors. The question at the OpenStack Summit was whether OpenStack could benefit from a corporate leader helping drive the movement. If so, that could bring things full circle. The question is, with Rackspace’s deep bench of experience and involvement in OpenStack, could they be that leader?

Potential Suitors

Many have noted the potential suitors if Rackspace is contemplating sale. Brandon Butler of Network World mentioned some of the notables in his Cloud Chronicles post. Among those is a familiar cast of characters from technology’s elite.

So, what does all this really mean? Bottom Line: It’s anyone’s guess. But I have a theory.

The Private Advantage

I suspect one option may be to take the company private in order to provide some breathing room to retool. The shareholders of publicly traded companies are a fickle bunch. They’re looking for improvements in revenue and shareholder equity every single quarter. Miss a quarter and watch the stock price drop precipitously.

Sure, a company could make the necessary changes while flying as a publicly traded company. But that would require incremental change to minimize the impact to revenue. As such, it would be a slow and tedious dance in an otherwise dynamic and quickly changing industry. Not exactly a match made in heaven.

Going private would provide Rackspace some breathing room during a dip in revenue while the company retools to take advantage of the assets they have. During that time, they could realign their hosting and cloud businesses to take full advantage of their existing customer base while leading them through their maturing from traditional services to cloud.

Bottom Line

Time is not a kind mistress and I suspect Rackspace sees both the opportunity and the writing on the wall. However, the changes must come quickly as time is a constant and not redeemable.

HP Launches Helion to Address Enterprise Cloud Adoption

Today, HP takes a huge step forward to address the broad and evolving enterprise cloud demand through their HP Helion announcement. HP Helion presents HP’s strategy to provide a comprehensive cloud portfolio. As HP’s CEO Meg Whitman mentioned, “HP is in it to win.” HP is investing over $1b in their cloud-based solutions. It’s clear that HP is working hard to win the new enterprise game.

Traditional IT demand is not going away, but the demand for cloud is increasing. Most enterprises struggle to leverage traditional IT while adopting Transformational IT. Providers, such as HP, need to address this complex and hybrid approach. With Helion, HP ups the ante in addressing this demand.

Today, HP launches their Helion brand encompassing their entire cloud portfolio. The formerly know HP Cloud solution is now part of the Helion branding. But the key change isn’t the branding change. It’s the end-to-end products that address an enterprise’s needs regardless of their state of cloud adoption.

Open Source Software Part of HP’s Strategy

HP’s commitment to OpenStack is not new. They have two board members as part of the OpenStack Foundation. And their further commitment to embrace OpenStack as part of their core cloud offerings furthers both HP and the OpenStack movement as a whole. OpenStack is a key opportunity for enterprises and service providers alike. However, open source software, and specifically OpenStack has presented significant challenges for enterprise adoption.

One of the first solutions from HP is their OpenStack Community Edition (OCE). OCE is intended for entry-level use up to 30 nodes. OCE is an approachable way for enterprises interested in OpenStack to get started. For enterprises interested in going beyond 30 nodes, HP’s commercial solution bridges the gap.

OCE is not only open source, but supported by HP. It’s also one of the first distributions based on the OpenStack Icehouse release. HP intends to ship updates every six weeks, which will keep the distribution fresh. HP OCE is available today as a free download.

Also announced today was HP’s commitment to Cloud Foundry. Cloud Foundry presents an additional opportunity for enterprises to embrace cloud through PaaS. For many enterprises, PaaS presents the solution between a core infrastructure solution and SaaS solutions. Plus, PaaS provides portability for applications based on a specific platform.

In Summary

HP Helion presents one of the most comprehensive end-to-end solutions for enterprises today. OpenStack is very interesting for enterprises, but difficult to consume. Helion lowers the bar and gives enterprises options they’ve been clamoring for.

What Happens if Twitter Went Away?

Ok, that sounds like doom and gloom…but is Twitter too big to fail? Today marks six months since Twitter (NYSE: TWTR) went public. Twitter priced their IPO at $26 per share. On the first day of trading, their stock reached a high of $50.09 and ultimately closed the day at $44.90.

In addition, the lockup ends today for Twitter’s early shareholders or roughly 81% of Twitter’s stock. As such, the stock cratered almost 18% to $31.85.

Twitter Stock Price

At the same time, user growth and EPS are both decelerating. For the naysayer, this paints a picture of impending doom. Whether you believe that is the case or not, the question still exists.

Twitter User Numbers

What would happen if Twitter went away? What would happen to the users and demand? Would it shift to other Social Media sites like Google Plus or Facebook? And would it put a chilling effect on social media as a whole?

Many believe that there is value in social media. Could it be as simple as finding a balance between free and paid services? What are you thoughts?

 

Note: Originally published to Medium: https://medium.com/p/21aa6f8f7323

First Impressions of EMC World

EMC World, EMC’s core annual conference is this week in Las Vegas and there are a number of very core things to watch out for. EMC’s presence in the enterprise space is legendary. However the enterprise space is gaining momentum in the enterprise IT evolution. The question is: Is EMC in a position to support these changes and continue to provide the leadership they’re known for. Bottom line: Companies are moving to the cloud. On the surface, this could present disaster for EMC. Key will be EMC’s ability to shift and help customers embrace the cloud.

Importance of Storage

Storage has grown up. No longer are the days where storage is just a place to store data and files. Storage is now key to the success of any given application. EMC clearly understands this and needs to evolve to this change. This is new! But it provides a radical shift in opportunity for companies like EMC. Look for EMC to make the connection between applications and storage.

Partnerships & Ecosystem Development

EMC provides leadership to enables IT to provide greater business value. The key is to evolve quickly and provide solutions that are needed both today and moving forward.

One could argue that no one company can (or should) be everything to everyone. Even very large enterprise providers such as EMC, need to embrace this shift. One example of EMC’s recent shift is their partnership with SAP. Frankly, this is a great sign of maturity on the part of EMC. Similarly, HP recently started providing their ‘Shark’ solutions for SAP’s HANA. Look for EMC to embrace this relationship and look to other key relationships between EMC and key enterprise players.

Open Source Software Integration

It is clear that open source software (like OpenStack) is changing the way enterprise solutions are built and consumed within a completely new economic model. The more mature enterprise-class providers will acknowledge this shift and embrace it. Look for EMC to provide greater integration with open source solutions.

Enterprise to Service Provider Shifts

Historically, enterprise-class providers create solutions specifically for enterprises…not service providers. Service provider requirements are quite different from that of their enterprise counterparts. At the same time, the shift in demand from enterprise to service provider happens over time, not all at once. Look for EMC to acknowledge this shift in terms of integration between solutions and changes in their management tools. The impact of general-purpose storage solutions also changes the paradigm for EMC. EMC needs to demonstrate value beyond the underlying physical hardware.

The VMware and Pivotal Impact

A constant question for EMC is how VMware and Pivotal play a role in EMC’s future. Both companies provide solutions that support the evolving changes within the enterprise. But potentially create a loggerhead for openness. Can EMC embrace the changes and innovation from both VMware and Pivotal, but still maintain flexibility in their open approach to alternative solutions? Look for indications of this through their partnerships and reference architectures.

Timing is Everything

EMC provides core storage solutions for key enterprise applications. In many ways, these are the very applications that are both sensitive to enterprises and harder to move. In both cases, this translates to risk. Enterprise customers have been hesitant to make the shift from traditional storage solutions to alternative approaches. That attitude is changing. Change is no longer an option it is a requirement. How is EMC taking a leadership role to help existing enterprise customers make this shift? Look for EMC to provide examples of flexibility beyond the traditional enterprise constraints.

In Summary

This year, more than any in the past, is a watershed year for EMC. This year, the stars are aligning where customers are open for change, looking for help and ready to get started. The traditional enterprise sacred cows are up for grab. Now is the time for EMC to demonstrate how they can make this shift and continue to provide leadership to the enterprise customer.

Initial Impressions from IBM Impact

This week is IBM’s Impact Conference in Las Vegas. In past years, IBM conveyed components of different strategies around Mobile and Cloud. However, they have since moved to an integrated approach. This integrated approach is great, but offers a few challenges for an incumbent such as IBM. Here are some things to watch for this week:

Hardware is King

Many of the conversations at Impact have mentioned IBM’s heritage and leadership in the hardware space. This year, IBM celebrates 50 years of the mainframe. And there is plenty of innovative work IBM is doing in the hardware space.

The question is not about IBM’s leadership in hardware. It is more around their longer-term vision. IBM is a company challenged with keeping existing customers engaged (many of which are hardware customers), while engaging an even strong software and services story. The days of the general purpose processor that supports a myriad of applications is less important than specific infrastructure geared toward highly specialized workloads that run at scale.

The Shift in Enterprise Demand

Enterprises are still buying hardware today. But the demand for hardware is shifting from enterprises to service providers. As such, providers like IBM must evolve their software, management and tools to support the change in customers. This impacts the usability for enterprises and service providers alike. And vendors like IBM need to both acknowledge these shifts…and have an answer to the demand.

The Converged Story

Many want to talk about mobile and cloud in specific silos. IBM has been no different in the past. However, at Impact this week, IBM is talking the converged story around both mobile and cloud. This is a key shift in thinking that mirrors the holistic thinking any enterprise should take.

The SoftLayer Parlay

IBM’s acquisition of SoftLayer presented a brilliant opportunity to build a platform for the future. IBM needs to continue innovating and leveraging the SoftLayer platform in a myriad of ways that accommodates the varied requirements of customers (both current and potential).

OpenPOWER Foundation

This week, IBM is promoting their OpenPOWER Foundation pretty heavily. While this is a great move in the right direction, the branding might be off-putting for potential new customers looking for an ecosystem that is less tied to IBM’s hardware heritage. Look for further distinctions to be made in this space as IBM evolves.

Hybrid & Holistic

Finally, moving away from a silo approach, look for IBM to take a holistic approach to embracing both hybrid cloud and mobile strategies. Again, this mirrors where enterprises today need to go. Not necessarily where they are today. But that provides opportunity for IBM to take a leadership position in the industry.

The Cloud Storage Wars Heat Up

While the cloud storage wars have simmered between Box and Dropbox for sometime, someone just poured gas on the fire. And that someone is Microsoft. With today’s announcement, Microsoft has just put Box and Dropbox in their crosshairs.

The competition becomes particularly interesting as Box and Dropbox are both planning a public offering. At the same time, potential investors are questioning the sustainability of a standalone cloud storage business.

Today’s announcement increases Microsoft’s cloud storage offering (OneDrive) from 25GB per user to 1TB per user. This brings it on par with the business offerings of Box and Dropbox. At 25GB per user, the amount of storage available was interesting, but could lead to challenges for the largest consumers of storage in an average enterprise.

Comparison of Cloud Storage for Business

Company Storage Price
Microsoft 1TB $5/user/month*
Box 1TB $15/user/month
Dropbox Unlimited $15/user/month

* Microsoft OneDrive for Business is also included in Office 365 plans as low as $5-8/user/month

Data as of 4/29/2014

 

The Enterprise Effect

As more business customers move to cloud-based services, email becomes an early target. Exchange and Windows are still the standard for most companies today. This installed base has a huge effect on the potential outcome. Switching to alternative platforms can present a challenge on top of all other challenges an IT organization faces.

The Holistic Approach

While Microsoft’s solution is fairly closed and Microsoft-centric, this is not much different from what enterprises have faced for some time. In some ways, if an enterprise could ‘forklift’ their entire operation to a holistic solution for fundamental services (ie: Email, Storage, etc), that could present an attractive solution.

But that’s not the entire story. Companies today are looking to break the reigns of constrictive, closed ecosystems. That’s where Box and Dropbox excel beyond that of Microsoft. In any case, both Box and Dropbox will need to respond appropriately. The real opportunity for these companies is well beyond that of file storage.

For customers, the question of which solution to use comes down to your individual situation and which approach makes more sense both short-term and long-term.

Further Reading:

Microsoft Targets Box, Dropbox

http://blogs.wsj.com/digits/2014/04/28/microsoft-targets-box-dropbox/

Microsoft Blog: Thinking outside the box

http://blogs.office.com/2014/04/28/thinking-outside-the-box/

Box Blog: An Open Microsoft

http://blog.box.com/2014/04/an-open-microsoft/

Can Microsoft Maintain Enterprise Interest Through Cloud and Mobile?

The past 60 days or so have shown a wave of changes at Microsoft. But are they enough to maintain interest by enterprise customers that Microsoft has long since courted…and counted on for the bulk of their revenue?

Revenue Breakdown

About a third of Microsoft’s revenue comes from their Business Division. A quarter comes from their Server and Tools Division and another quarter from their Business Division. The rest of the software giant’s $77.8 billion in revenue comes from Entertainment and Online Services (ie: Bing & MSN). Revenue from Microsoft’s Azure cloud service falls under their Server and Tools Division while their Office 365 cloud service falls under the Business Division category. The question is: Can Microsoft shift gears to replace diminishing traditional software with services such as 365 and Azure. In order to answer that question, Microsoft’s cloud strategy becomes front and center.

New CEO at the Helm

Next year will mark Microsoft’s 40th anniversary since their founding in 1975. Roughly 60 days ago, Microsoft announced a new CEO, Satya Nadella. Nadella is only the third CEO to lead Microsoft during their almost 40-year history. A long time Microsoft employee of over 20 years, Nadella has lead different parts of the organization most recently leading Microsoft’s Cloud and Enterprise Group. It is this last assignment that may be the most critical to his (and Microsoft’s) success moving forward.

Microsoft’s Halo is Strong

No, not that Halo. The halo effect from Microsoft’s existing enterprise business and relationships is strong and not expected to erode any time soon. In order to understand this further, one can look at the percentage of desktop operating system (OS) market share that Microsoft currently commands.
os_market_share_december_2013

Credit: The Next Web

Beyond desktop operating systems, Microsoft is still the dominant player in the productivity suite…by a long margin.

prod_suite_adoption

Credit: Forrester

Desktop OS and Productivity Suite are foundational to any enterprise customer. The relationship Microsoft garners with enterprise customers is strong and wide. And the value of those relationships is a gold mine that any provider today would kill to have. The question really comes back to Microsoft’s ability to convert customers from traditional software users to next generation users of cloud and mobile centric solutions.

The End of the XP Era

Well, not really. Yes, Microsoft ends support tomorrow for XP, but there is still quite a bit of the XP operating system in use between corporate systems and embedded within products. According to many, XP’s percent of desktop market share still hovers near 30%. It will take quite a while (read: years) to completely replace those systems. In the meantime, expect to see an increase in compromises through those unprotected systems.

Turning a Battleship in a Bathtub

Bringing in a new CEO that appreciates both Microsoft’s history and the new cloud centric world was a key move for Microsoft. If there was a time for Microsoft to change, now is that time. At the recent BUILD conference, Microsoft expressed their understanding of the importance from cloud and mobile. With Nadella at the helm charged with a background in cloud, the next few months will be critical to prove his ability to start the transformation of a giant. Customers will want to watch Microsoft’s next moves closely as it should set both the tone and cadence of future moves.

The Shark of HP Converged Systems

The story of Converged Infrastructure (CI) continues to gain steam within the Information Technology (IT) industry…and for good reason. Converged solutions present a relatively easy way to manage complex infrastructure solutions. While some providers focus on CI as an opportunity to bundle solutions into a single SKU, companies such as Nutanix and HP have produced solutions for a couple of years now that go much further with true integration.

As enterprise IT customers shift their focus away from infrastructure and toward platforms, application and data, expect the CI space to heat up. Part of this shift includes platforms geared toward specific applications. This is especially true for those operating applications at scale.

Last week, HP announced their ‘shark’ approach of hardware solutions geared toward specific applications. One of the first targets is the SAP HANA application using HP Converged System 500 as part of a co-innovation project between HP & SAP. It is interesting to see HP partner with SAP HANA with so much emphasis on data analytics today. In addition, specialized solutions are becoming increasingly more important in this space.

Enterprise IT organizations need the ability to start small and grow accordingly. Even service providers may consider a start-small and grow approach. Michael Krigsman (@mkrigsman) recently wrote a post outlining how IT projects are getting smaller and still looking for relief. HP expressed their intent to provide scalable solutions that start small and include forthcoming ‘Project Kraken’ solutions later this year. Only time will tell how seamless this transition becomes.

Additional Reading:

HP CS Blog Entry:

http://h30507.www3.hp.com/t5/Converged-Infrastructure/HP-ConvergedSystem-for-SAP-HANA-meet-the-industry-s-most/ba-p/157176#.UynDsdy0bfM

IBM Dev@Pulse Conference Impressions

The Dev@Pulse conference is IBM’s developer conference tagging onto the core IBM Pulse conference. This is IBM’s first year trying to hold a developer-centric conference (Dev@Pulse) alongside their flagship cloud conference (IBM Pulse). Dev@Pulse is about as far away physically as you can get from the main conference and held in a nightclub rather than conference center. While Hakkasan LV Nightclub is a trendy choice to hold a developer summit, the attendance seemed thin and pulled from the existing IBM user base.

In talking with folks at the event, it seems IBM is trying new things like lightning talks, demos and a playground to woo developers. There are several labs to choose from too. In talking with devs prior to the event, many of them had not hear of Pulse, let alone Dev@Pulse. This seems like a miss on IBM’s part to attract new developers to the IBM ecosystem. After attending several sessions at Dev@Pulse, I’d say that it has the makings of a decent developer conference.

A good example was IBM’s technical rundown of the just-announced IBM BlueMix. The session went soup-to-nuts on how to deploy an app using BlueMix as a great summary introduction of how BlueMix works and how to deploy an app using the new service. However, only 50 or so folks were in attendance for the talk here at Dev@Pulse. One presenter even asked the audience how many are Cobol programmers and several raised their hands. That is a very different crowd from the typical Node.js, Rails, Python crowd.

On the other hand, IBM is identifying the need to bridge the gap between cloud-based apps and traditional apps. They also note that the challenge is in extensively leveraging APIs. The API economy is a reality…not just with IBM but in the industry today. That’s pretty forward thinking (and refreshing) for a traditional enterprise organization like IBM. The question will be: How to get the permeation through the rest of the organization beyond just BlueMix and SoftLayer.

Trying to attract developers to a conference like IBM Pulse or Dev@Pulse will be hard to do in isolation. There are a number of other efforts in terms of location, audience, social impact and content that IBM needs to address in order to make significant, sustaining waves.

IBM Pulse Conference Impressions

IBM’s conference on cloud is taking place this week in Las Vegas at the MGM Convention Center. There are two core parts to the conference; The main Pulse general conference and the Dev@Pulse conference which is specifically targeting developers. The two conferences are…and feel…completely separate from one another.

IBM Pulse Core
The main IBM Pulse conference is IBM’s rebranding of their past Tivoli conference into a cloud conference. Pulse 2014 is branded as ‘The Premier Cloud Conference’. I’m not sure I would go that far, but it’s much more than that. IBM is bringing much more of their software portfolio to bear. Having attended, keynoted and presented at a number of cloud conferences around the globe, this one takes on quite a different vibe. It’s far more subdued and less energetic than its cloud rivals. That could stem from IBM past culture creeping forward. But there are many trying to shed the IBM of old for a fresh and modern perspective. Just talking with folks around the room, it’s clear that the individuals want to turn the corner, but it’s hard to turn a battleship in a bathtub. Changing culture is hard.

The presentations have been a mix of lukewarm depth and buzzword bingo. While the right things are being stated and the cloud-centric focus is decent, it is unclear the impact IBM has for its customers. This seems to be a pretty significant gap for IBM to fill in the coming months. One area IBM needs to address is how to attract new developers and customers. Looking around the room, 1/2 of the gentlemen are in suits while the other 1/2 are simply jacket-less. You rarely see the jeans, tee shirt or hoodie walking the floor. This speaks more to IBM’s current user base that the new millennials that are the real x-factor in cloud development today.

And speaking of developers, IBM’s Dev@Pulse developer conference is happening in tandem with IBM Pulse. More on Dev@Pulse and IBM Pulse perspectives coming soon!