Today, I’m going to write about an equation. I’ll try to make it easy to follow, but it’s still stats and graphs. Stay tuned and I’m convinced it will be worth your while, because in my opinion, it’s the most important equation in cloud computing. It’s what drives your market, your customers, and your burn rate.

If you build a traditional data center platform for your application, you worry about three variables: The amount of traffic to your site, your capacity to handle that traffic, and the user experience they get, such as latency. The equation looks like this:

User experience = Traffic / Capacity

As traffic increases, user experience gets worse and delay goes up. This is because each visit to your site consumes resources on your infrastructure, and some users wind up waiting for the app to respond. Networks get full; databases encounter record locking; message queues back up; and so on. Ultimately, some of your visitors have a lousy experience.

On-demand computing platforms fundamentally change how you deal with this, because as far as you’re concerned, they have infinite capacity.

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Amazon’s rolling out an extension to its S3 storage offering that will help move content closer to users, reducing WAN latency. “Using a global network of edge locations this new service can deliver popular data stored in Amazon S3 to customers around the globe through local access,” announced Amazon CTO Werner Vogels on his blog. Om beat me to the punch on this one and has a great writeup, too.

The service gives Amazon a much-needed footprint in Asia, but also serves notice to CDN companies that the days of long-term, minimum-rate, negotiated contracts and favored pricing are nearing their end.
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By some sick twist of fate, Interop and VMworld are happening at the same time this week. That creates a real problem for those of us in the space where the application meets the network. Do we go to New York for Interop, which is conveniently next to the Web2Expo, or do we go to VMworld? Many companies, including Zeus Technology, split their executive teams, sending some to New York for stupidly expensive hotels and great food, and others to Las Vegas for slightly less expensive hotels and slightly inferior food, but better gambling. I ran into some of 3Tera’s execs at Accel’s reception at the Tao Opium Room, and they had the same problem.

Alistair made the call to go to Interop. I made the call to go to VMworld on my own nickel, since I have lots of friends in the virtualization business due to my time at Citrix, where I did strategic planning for their virtualization business pre-XenSource. Special thanks to Fortisphere for covering my show pass! I miss expense reports, or at least getting them paid.

But the real reason VMworld seemed a good idea is that, in addition to consulting, I’m working on a stealth mode cloud computing idea, and I guessed that VMworld would be the place for clouds. It sort of is, but not compared to Alistair’s cloud program at Interop. Sure, there is VMware’s Vclould announcement, and there are quite a few companies with the world “cloud” on their booth, and some real cloud companies like RightScale and SkyTap, but on Wednesday, there are more than 80 VMworld breakout sessions, and exactly one of them is about clouds specifically.

Why is this happening? It’s because VMware is focusing on virtualization in all its flavors, but the cloud computing guys see virtualization as only one of the enabling technologies that can make clouds work. So I guess it’s natural for the clouds to be attracted to Interop and Web2Expo more than VMworld.

Reading the buzz coming from VMWorld in Vegas toay, it’s clear that VMWare is finally embracing management tools. This has been an interesting road for the company, and I believe Microsoft is forcing their hand — something CEO Paul Maritz is painfully aware of.

A major problem with virtual machines is sprawl. They’re so easy to create, anyone can do it. And they do — leaving hundreds of orphaned virtual machines and thousands of license dollars in VMWare’s pockets. David Lynch of Embotics alluded to this when I spoke with him last week. Why would a company that sells licenses want to help people manage that sprawl?

The short answer is Microsoft. If you’re building a cloud, you’re going to use something that’s free and open for you to hack around with. In other words, Xen. And if you’re an enterprise, you’re going to use a VM that includes machine, OS, and application licensing. In other words, triple-threat Microsoft.
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Just read an interesting article on Forbes.com by Dan Woods entitled “Parsing the Cloud“. Dan makes a similar argument to our own Ian Rae, suggesting that specialized clouds will be required to meet the privacy, regulatory, geographic latency and application architecture demands of cloud consumers.

This begs the question, who will build all these specialized clouds? Are there incumbents who simply need to evolve, or will we see the birth of dozens or hundreds of new cloud providers?

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Google’s Chrome browser is pretty sweet. Some of the reasons are simple, some are esoteric; many, people won’t understand.

But the most telling aspect of the release may be the screenshot I’ve attached here. Have a look at the Chrome task manager and the Windows task manager. Which knows more about what I’m doing? Which is on top? Windows is Chrome’s bitch.

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We speculated on vertical stratification of clouds at Interop Unconference back in May: demand for specialized cloud platforms will arise despite the availability of highly centralized low cost utility computing (i.e. Google, Amazon) since specific requirements of privacy or business process will require value added services and specialized architectures. Could one imagine a cloud provider specializing in HIPAA compliance?

Well an example just hit our radar: Fedcloud offers “Federally Compliant Trusted Cloud Computing.” (thanks Data Center Knowledge!) “A Trusted Cloud Computing Environment: Apptis and ServerVault combined our capabilities to provide you computing in an on-demand infrastructure that enables you to acquire, utilize, and disengage without contractual dependency (subscription fees, licenses, or long-term commitments). This extraordinary capability offers a utility bundle inclusive of hardware, software, personnel (24×7x365 engineering and operations, and application management) all with federally compliant security, processes, and procedures.”

Why this verticalization? Architecture and operations can matter a lot when specific requirements are introduced. There is an opportunity for premium margins for utility computing that addresses specific industries. You may need to be in a very narrow geographical area, or need technologies specific to your trade to be running in the cloud data center. Perhaps you aren’t allowed to share a hypervisor with other organizations? Or you might need on-site staff trained in particular arcane skills. Some types of vertical clouds could theoretically rest on top of infrastructure service clouds in the same way that Rightscale and Elastra sit on top of AWS, others will need to have an entirely difference architecture. Look for wide diversification and layering of these “vertical clouds” in the next few years, and a healthy ecosystem of options for cloud consumers!

While on the topic of cloud computing, Todd Hoff has an excellent short list of other cloud computing blogs to check out!

Amazon has publicly released a new Amazon web service called Elastic Block Store providing up to a terabyte per volume of persistent storage and allowing you to run your database in their cloud with the advantages of snapshots and flexible attachment to servers.

Rightscale, who offers a management and automation system based on AWS, has an excellent article explaining how Amazon’s Elastic Block Store works. In testing they report over 70 MB/s (that’s over half a gigabit per second) and over 1000 IOPS or input/output operations per second which is the ballpark equivalent of a dozen 7200rpm hard drives serving your data in tandem. They also report “it is possible to mount multiple volumes on the same instance such that file systems of 10TB are practical.” No doubt much more detailed performance and feature analysis will ensue shortly.
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As Alistair pointed out recently, interest in cloud computing is skyrocketing. All of IT seems to be reframing the industry around the term “cloud computing.” Google’s cloud computing group is a veritable inbox-denial-of-service-machine, and offers more philosophy than practical grist for those of us in the trenches engineering or operating applications in the wol. Reading the threads, I was reminded of this classic exchange between Hamlet and Polonius:

Ham. Do you see yonder cloud that ’s almost in shape of a camel?
Pol. By the mass, and ’t is like a camel, indeed.
Ham. Methinks it is like a weasel.
Pol. It is backed like a weasel.
Ham. Or like a whale?
Pol. Very like a whale.

Companies are scrambling to rebrand their services as cloud based, many of them without substantially changing their offerings. In an intensely speculative industry, overpopulated with caffeine riddled ADD sufferers (it takes one to know one), it is easy to get swept away with the new semantics. But something real is driving the use of the amorphous term, and as this blog has pointed out we have witnessed a seismic transition refocusing the IT industry on a new style of utility computing.
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Wagner over at GigaOm talks of a major defection from the world of traditional Massively Multiplayer Online Games (MMOs.) It bears some discussion.

Most MMOs involve software you install (a “fat client”) and a monthly subscription. They’re lucrative — Blizzard’s World of Warcraft is the big one, with an estimated 10 million players worldwide. There are others, like Everquest, Age of Conan, and Eve Online.

These MMOs need to keep adding content to retain users. Warcraft originally let players climb to level 60; then they added the Burning Crusade, which moved the level cap to 70. They’ll soon introduce a third patch which adds more content and takes the cap to 80. Each time, they sell new software and they change the game to make it easier to get to the higher levels, changing game dynamics.

As Wagner points out, the dynamics of the industry are changing. “Casual” MMOs like Runescape have a huge following, and start out free. They run in a browser, and they make their money wherever they can — through item purchases, advertising, and “premium” game models.

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