The Rise of The Vertical Cloud

While some are happy to debate definitions of cloud computing, I prefer to focus on the characteristics that make successful companies, successful. Lately there seems to have been a shift from the anything for anyone cloud to the industry or vertically focused cloud. Adding to this is today's piece of news from Zynga who announced what they describe as "the beta release of Zynga.com,  a new service enabling third party developers to create and publish games on the Zynga Platform." Yes, that company that brought you farmville is now going to be a cloud service provider enabling a whole new crop of game companies, which I can only assume they will acquire when the time is right.

So why is this news important? It's another great example of a trend in the cloud computing sector of "Vertically focused" cloud products and services. In the early days, there was this mentality of just build it and they would come. Problem was that for most, they never really came. Instead you had a handful of very large players and everyone else fighting over the table scraps. What those who survived learned, is that in order to be successful it isn't about being the best funded or even the best performing, but instead it is about being the most focused on the needs of a particular customer vertical. Those who focus on a particular problem, be it for a particular enterprise sector, application or customer need will have a clear and distinct differentiation in a market dominated by me-too cloud services.

This trend certainly isn't unique to the cloud space, look at Facebook as an example. In an early market they were able to quickly gain a dominate position as a fairly generic social network. As the social market began maturing you started to see the most successful companies becoming more and more laser focused. A great example  is Instagram who according to Mashable now has more than 50 million users and is gaining about 5 million users per week, not to mention it was recently acquired by Facebook for 1 billion dollars. They succeed because of their ability to focus on a vertical. This trend seems to be gaining momentum recently with apps like SocialCam seeing astounding growth by focusing on the vertical niche opportunities over looked by their larger, better funded competition..  TechCrunch reported that SocialCam jumped from 12 million users last week to 20 million users today. Yes, 8 million new users in 1 week. Focus Focus Focus. Where's youtube?

So what does a consumer focused app and a gaming company have to do with Cloud computing? Everything, as our market matures we are beginning to see the same sort of vertical focus for  the most successful new bread of cloud companies entering the scene. No longer is it acceptable to want to be a clone of Amazon or who ever you consider to be the leader in a particular sector. Nor is it wise. Those who focus on the industry sectors neglected by the largest players will see the most success and will be selling themselves for an Instagram or two.
(1 instgram = $1 Billion USD)

The Cloud Backbone – Infrastructure: Digital Nibbles Podcast episode 008

I'm hosting solo this week and our guests are Ben Kepes from Diversity Limited and Reza Malekzadeh from Nimbula. Ben chats about the infrastructure and tech industry in New Zealand and how that ties to the opportunity in emerging markets while Reza tackles a discussion of the open source model and where the infrastructure as a service (IaaS) industry is heading.

You can find Ben on Twitter @BenKepes  

Show Timeline:
0:00: Reuven updates us on his travels in Korea and covers the News of the Week
10:13: Interview with Ben Kepes from Diversity Limited
24:57: Interview with Reza Malekzadeh from Nimbula
35:21: Wrap up

#DigitalNibbles On The Road: Cloud Computing in China with Intel's Billy Cox

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Chatting with Intel's Billy Cox outside Olympic Park in Beijing. We discuss the cloud computing marketing in China.

A Venture Into The Business of Business in the People's Republic of China

View from my Hotel in Shanghai

My Asian adventure continues. This time I'm writing from Shanghai. Like many of my trips to the region, I've learned more in a few days than you could in a lifetime of studying the Chinese IT business scene from afar. At this point that fact that I've build and sold a Chinese joint venture puts me in a rather unique position to describe the business landscape in China like no other. Not just from a purely academic one but from a practical one. One that allowed me to experience the full lifecycle of a Chinese JV. In my case, this lifecycle went from concept, to funding to sale within 16 months and included a cast of characters ranging from senior party members, international funders and business partners. To say business in China is exciting would be putting it mildly.

I've often described business here as an episode of TV show Madmen. Done in smoke filled rooms with significant quantities of liquor flowing freely. A business scene dominated by influence. Who you know and who you can introduce are central. A social network based on degrees of separation in the most human of ways. Your social graph in China is your currency and how you leverage it is key to your success here.

Another observation is that money and access to it is extremely accessible. This is thanks in part to strong government support for international joint ventures (such of my previous JV) makes funding potentially much more attainable. In order to be successful in this market requires that government (or at least it's money) plays a central role in your business venture. It's not a relationship based on control so much as support. Assuming your ok with the rules of engagement, the opportunities are vast. But there are caveats, IP controls are lacking and the Chinese are highly dependent on foreign innovation and technology to offset a lack of home grown options. I believe a big reason for the heavy investment in these types of foreign joint ventures is a kind of indirect flow of knowledge. It's not a blatant copying of IP so much as a loose knowledge transfer. Understand that a international joint venture is essentially a training vehicle. Once you understand this, you can properly address the market and the opportunities it holds. Mainly access to one of the largest fastest growing markets on the planet today. A planet currently dominated by stagnating growth in the established western markets. What's going on in Europe these days? Not much.  Of course with risk comes great reward. In my case the ability to build and ultimately sell a venture in less a year and half. Try that in Canada? Unlikely.

I'll be posting more details of my discoveries in the coming days, in the mean time. Some food for thought.

IT's the Cloud Eco-system that Matters Most

Just catching up on some of my cloud news this morning and read an interesting PR release from the CloudStack team over at Citrix. Generally the news was less interesting than a couple small tidbits from the actual press release. In it, they stated that CloudStack has "hundreds of production clouds, collectively generating more than $1 billion in cloud revenue."

Yes, you head correctly, $1,000,000,000 in collective cloud revenue. It is impressive to say the least. But what I really think they're saying is that their "eco-system" is monetizing like crazy. Although I have no proof, it does make you wonder.

An eco-system is why people choose to build applications for a certain platform, for example Apple over let's say Android, or AWS over Azure or salesforce over whomever. It's always the eco-system. Moreover it's the ability to leverage a large talent pool of users, customers and solution providers. It's the ability to piggy back atop of what others have already done and best of all, a quick and easy way sell to them.

Moving on, I also found this little bit interesting. Again focus on the numbers;

The transition to the Cloud is fueling a massive build out of cloud infrastructure, projected to exceed $11 billion by the end of 2014. This new market will feature thousands of successful clouds of all shapes and sizes, ranging from business, infrastructure and developer offerings, to consumer, mobile and gaming services. The proposed Apache CloudStack project will make it easier for customers of all types to deliver cloud services on a platform that is open, powerful, flexible and “Proven Amazon Compatible.”

They've hit both, they're saying they have an eco-system, but they're also themselves leveraging the AWS API to hit Amazon's Cloud eco-system.

To me, this speaks to the main and most important reason to choose a particular platform, *stack or cloud over another. The ability to capitalize on its eco-system. An interesting move and one to watch in the coming months.