Product-Centric Cloud Computing: A Race to the Bottom

Earlier this week I pronounced death of the 99.9999 value proposition with the advent of cloud computing. This week alone, there has been a flood of announcements and activities by EMC, Cisco, HP, Intel and others as they craft new alliances and offerings to position themselves as technology players in the cloud. Just look at some of the headlines:

In the midst of all these announcements from the big boys, a small startup named Liquid Computing made this announcement:

Liquid unveiled its Liquid Elements software that will work with Intel-based servers and NetApp storage gear. The software and Liquid’s switch can be combined to deliver the same sort of unified fabric computing that Cisco has been selling. Liquid differs from the Vblocks on offer through Cisco/EMC/VMware in that the software can run on any Intel-based server, either virtualized or in a bare metal implementation, said Vikram Desai, CEO of Liquid Computing. Cisco’s servers use Intel chips, but they are all about running virtual machines.

This is a perfect example of where the technology of cloud computing is heading: low margin, commodity infrastructure. Mark my words: The big money in cloud computing will be made by companies that provide both the infrastructure and services customers require to successfully run their businesses in a cloud environment. For example, the new Vblock offering by Cisco and EMC bundles the hardware, software, and maintenance services required to create cloud infrastructure. This is interesting, but not enough to drive the adoption of cloud computing by corporations. And it will not be long before companies like Liquid Computing create cheaper product bundles that undercut the margins of the Cisco/EMC offering.

Who Can Help?

The real question on the table is who will create the service offerings that allow companies of all sizes to easily and cost effectively migrate from a CPE (customer premise equipment) model to a cloud model. Today I googled the following search string:

help migrate to cloud computing

Look what companies pop up in the paid advertising:

  • IBM
  • HP
  • Advanced Consulting Group (regional consulting firm from Long Beach CA.)

The two largest computing companies on the planet and one regional consulting firm. Interesting. If Cisco and EMC and Netapp and VMWare and all the other product companies want to secure significant revenues from cloud computing, I recommend they start be answering one simple question: how can they help customers actually migrate to this new model?


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One Response to “Product-Centric Cloud Computing: A Race to the Bottom”

  1. The Google Price « Service Visions Says:

    […] Product Centric Cloud Computing: A Race to the Bottom […]

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