 Good morning everyone and welcome to the April 23, 2013 Wikibon Peer Insight research meeting where business technology peers meet to solve challenging problems. I'm your host and moderator, Dave Vellante. Today we have a timely and interesting topic. Software is eating the world. The question is, will Amazon eat IT infrastructure? This is our first ever bi-coastal peer insight. I'm here at the Wikibon offices in Massachusetts and today we're joined by my colleagues at the brand new SiliconANGLE Studios in Palo Alto, California. And we are broadcasting live from both coasts. You can watch on siliconangle.tv and siliconangle.com. Jason Mendenhall is here. Jason is executive vice president of cloud at Switch, creator of the SuperNaps. Jason is a cloud expert and supports the strategies and execution plans of the 500 service providers and customers who use the SuperNaps. Welcome Jason. Can you hear me? Hello Jason, are you there? So joining Jason is David Foyer, who is also in our studio. Can we have a sound check, please? Guys, we can't hear you. You may be on mute. Hi, can you hear me now? Yes, there we go. How about now? That's good. Thank you guys. All right. All right, good. Okay, we're running. The old phone works. So now you can listen in on the phone line or watch live on TV. There's a slight delay to the TV stream. So if you want to watch it online, I'd recommend that you cut the volume on your phones. Also other than Jason and David for now, please mute your lines unless you're speaking and we will give everybody a chance to do so. Now let me set up the premise for this call if I may. Last year Wikibon estimates that Amazon's AWS generated just under $2 billion in revenue and is expected to create roughly $3 billion in 2013. Its attack on the traditional enterprise suppliers has been well documented and the posture that AWS has taken toward incumbent infrastructure vendors has been extremely aggressive. The bottom line is Amazon is getting very serious about enterprise IT as a service. Now on the one hand, this is great news for customers because Amazon has certainly popularized the cloud concept and is creating more competition. On the other hand, Amazon is pressuring IT organizations to respond and while some Wikibon practitioners tell us that they are moving lock, stock and barrel to AWS, others say they don't want to put all their eggs in the AWS basket because it's often too expensive and too risky. Competing cloud service providers on the other hand are also on the move. One only has to observe the activities of last week's OpenStack Summit to see the momentum building in cloud. HP is betting the farm on OpenStack, IBM, VMware, EMC, Oracle and virtually every other enterprise IT player is either competing or partnering with Amazon or both. We're going to talk about these and other issues today. Let me start again with Jason Mendenhall, welcome to the cube and welcome to the peer insight. Thanks. Thanks for having me. I appreciate it. So Jason, let's start off with Switch and Supernap. A lot of our community is familiar with you guys, but why don't you start with a little bit about who you guys are and how we got here? Well, Switch is the world's data center, so we'll just start there and build from that story. We've built a unique technology ecosystem and it starts with the data center, layer in an extremely robust fiber connectivity network as a result of our acquisition of the Enron Broadband Peering Arbitrage data center and then expand that so that that ecosystem goes above and beyond just one facility, but multiple facilities in a technology campus that'll expand to 2.2 million square feet of data center space, making it really the largest technology ecosystem in the world. That connectivity and layer on it, a myriad of cloud services about three years ago when we headed down the path of cloud computing, what we decided to do was that there wasn't going to be one cloud, it was going to be everybody's need, which is important for the topic today, but that there would be multiple clouds. People would have multiple workloads, they would have multiple reasons why they would need to use cloud services. And so what we started to do was consolidate and aggregate all of those cloud service providers under one physically secure umbrella, the switch supernet, the most connected, the one that can handle the most density, the one that can handle the largest scale, so that our enterprise customers can put their private infrastructure in the data center and they can fully realize hybrid cloud. And so it's a unique technology infrastructure, you know at the end of the day, we write applications that end up on machines, that travel over networks, that end up on servers and storage that sit for the data center, whether that's in a cloud or over someone's private infrastructure that has to have a home. And I think one of the things we've done is created a great home for that. So Jason, where are we with respect to cloud today? I know you talked to a lot of customers, a lot of service provider partners. You know, I've always said that the downturn in 2008, 2009 precipitated a movement to cloud, maybe, you know, certainly for economic reasons, but I think it seems like there are other drivers to cloud. Can you talk about those drivers and where we are today in terms of cloud adoption and the maturity of the infrastructure? Yeah, I think it's an, I think, see, what's the best way to describe it? When we think, when I think about cloud today, I think we're kind of in the VHS mode, right, if you were following videos. Right now we're about the adoption of VHS. There's a lot of people that are using it. There's a lot of people that have been experimenting with it, but we're still on cloud kind of 1.0. Enterprises are really starting to look at this. And although we have a lot of the early adopters who've taken scale, there are a lot of large companies that have experimented with it. They've identified what they're going to do with it. They've identified how they're going to tackle it. And for some of them, it means continuing to use public cloud. For some of them, it means incorporating that into their own private cloud deployment. For some of it, it might mean a mix of the two. We're still, I think we're still in the early phases of this, though. We're still very early on, even though we see that the scale that we're operating at, and one of the things that we have that visibility into is what all these enterprises are doing and how they're adopting, not just public cloud, but also what they're doing in their private cloud environment. And so it's that mix of the two that are becoming an interesting play for the enterprise. From my perspective, I still think we're on the very early stages of this. When you say the mix of the two, you're talking about the mix of private and public, or so-called hybrid? Yeah, exactly, the mix of the two, yep. So in the early days of cloud, a lot of IT practitioners felt that that was a pejorative. They said, you know, what's different about cloud? It's just, it's really, you know, virtualization. And a lot of organizations, as you well know, have, you know, virtualized their IT infrastructure. But generally speaking, they were somewhat negative to the cloud. That sentiment is changing seemingly. What types of applications are organizations putting in the cloud? I know it's a spectrum, but take us through that lineup. Well, I think we see, you know, and when I talk to folks about cloud, I think it's important to break it down into two models, right? There's cloud the operating model, which is what we've done forever. You know, we've always taken applications workloads and we push them off to someone else in a managed environment. I actually, when we talk about cloud, we tend to talk about cloud the technology as opposed to just the operating model, which means you're building new application years, you're creating environments that can optimize the cloud platforms or optimize to run on the cloud platforms. And so the type of workloads that we're seeing right now, you know, it's not just hosted virtualization, which is a, it's a form of cloud, but it's not true cloud computing on the technology level. And so what enterprises are really starting to do now is the type of workloads we're seeing move into the cloud are these web 2.0, web 3.0, some of the new applications where they're re-architecting the code, they're writing the applications in a different way, so that those applications can auto-scale and auto-shrink based upon leveraging cloud technology. It isn't just about, let me get it, let me get, you know, my mess for last somewhere else, which is where cloud operating models and sometimes cloud platforms have been in the past. Now it's more about looking at it from a strategic standpoint. What can I do? What can I do to leverage that public cloud platform? And then what can I do with my, you know, with my web front end, with my applications that have to auto-scale? What about mobile applications on that environment? What about big data and analytics? And how does that have a play in that environment? And each of them are looking at it in a very different way. And it goes above and beyond now. I think where we're at is the innovative enterprises are looking above and beyond just hosted virtualization, which is where we've been in the past with cloud. And now they're looking at leveraging cloud technology to really change and transform the way they develop new applications, the way they deploy those new applications and the agility that they get as a result of taking advantage of that. And that's when we talk about being in the early stages, that's where I think I feel the story fits in those early stages right now. So how, can you add some color to how people are redesigning their applications generally and specifically their business processes? What kind of effect are you seeing the cloud have on those two factors in some detail? Yeah, so a great example, let's talk about healthcare, for instance, we've got one customer we've spoken to around in the healthcare arena. And they had an interesting model. Here is the highly compliant, highly secure, very concerned about public cloud, very concerned about how they're going to tackle that issue. They don't really want their workloads being out in the public environment yet. They really don't want them in multi-tenant spaces. And so one of the unique aspects we've been, what we were able to do for them and what we saw them do in our environment is they created a small inter-cloud exchange of sorts in their own private environment. So think about that for a second. What they realized is that, okay, we've got some applications that are back office IT. They run on VMware, they run on the old application models or they run on dedicated gear. And then we've got some applications that are kind of front end. They reach out to the end customer, their web 2.0, their web 3.0. And we've got to be able to scale those applications at a certain way. And the platforms that those run on, they're very different. And then we've got storage that's got to grow. And then we have a healthcare application. So rather than them looking at it and saying, yeah, we're gonna put all this into these public cloud. What they did is they brought the cloud into their environment and created a platform with full-time vendor approach within that, within their own private environment. And what they gathered out of that was a really unique tool set of their own kind of myriad of inter-cloud exchange, myriad of cloud services where they could take advantage of every one of those opportunities. That's where we're seeing kind of some of these highly resilient, highly compliant, highly regulated industries sort of tackle the issue. It is adopt some of these public technologies but bring them into a private environment. And then we've got other folks that when they look at big data, they're actually saying, look, we, and when we talk about big data, we separate it out into two areas. We talk about the big data where you go into someone else's environment like a Twitter or Facebook or Google and you mine their information. That's one type. The real money exists in people taking advantage of their own data. And what they're looking to now is they're saying, look, I've got all this data, but for me to build the high performance compute infrastructure to do the analysis on this, it's extremely challenging. So what we're seeing people do is take those workloads, move them into cloud platforms for the analysis and then bringing the data back after they've got there, after they've got the story told. And then there's the traditional front end user-based applications that need to auto scale, that need to be able to reach out to the end user maybe to be able to hit multiple geos and multiple regions. And when something occurs, when there's a big burst, they need to be able to handle that at scale. And we've got customers in the web 2.0, web 3.0 space that are taking advantage of those tools as well. So really, when you look at the spectrum, I think it's still across the board, it's still in every aspect. And I think we're at a stage of cloud now where people aren't asking, why cloud? They're starting to ask, which cloud? Which ties in directly to a little bit of what we're talking about today. Yeah, excellent. And we're about 15 minutes into the call. And as the folks who are familiar with Peer Insights know, we will give you an opportunity to chime in and I'm sure there are many questions. Before we open it up though, Jason, I want to get directly into the substance of this call. You heard my, oh, if I may, I ask folks to please mute your line. Somebody's making a lot of noise. We've got a wind tunnel going on. So star six if you don't have a mute button. Just a little background noise there. Thank you. So still got some background noise, please. If you don't mind muting your line there. One rogue line. I'll go in and start muting if I have to. But Jason, I wanted to ask you about AWS specifically. You heard my rap up front. Is AWS an unstoppable train? My colleague, John Furrier, when I wrote the piece on Amazon Gorilla in the enterprise, John said, you know, Dave, that's interesting. You call them a gorilla, but it's the first time that I can think of, this is John Furrier speaking, that the gorilla, the incumbent, was actually the disruptor. They're moving faster than everybody else. They're dropping prices faster. They're innovating faster. What's your take on Amazon? How are your clients competing with Amazon and are they just unstoppable? I don't necessarily think that they're unstoppable. I think they definitely have a place in the market. But we've talked about how it's no longer the question is why cloud is which cloud? And Amazon's gonna have an important play for every, you know, every enterprise is probably going to be looking to them at some point. But when you think about what they've done and where they're at, yes, they were the disruptor and yes, they've grown, you know, they're gonna continue to grow. They've grown at an amazing rate and they've been able to add service points, you know, points of service where people can consume lots of different types of things but their platform isn't going to be for everyone and it won't be for every workload. There is not going to be one cloud to rule them all. You know, when we look at some of the things that are overlooked by the enterprises, when they look at Amazon, as they dip into it, right? A lot of folks have been dipping their toe into the water and figuring out what it is. All of a sudden what they find out is the network is one of the most overlooked aspects of cloud computing and they're going, wait a second, they forgot that all this data's gotta move from point A to point B. Hybrid models, you know, that we've talked about already. When they get into Amazon, they're thinking about how do I do hybrid in this platform? How do I manage this? How do I control each of the elements of this application? Security, you know, becomes an issue. The location of the cloud is a question that they're starting to ask around that, you know? Think about the data center. I mean, I think that's one of the most overlooked aspects of cloud computing. Your data ends up seeing somewhere and the cloud is only as good as the infrastructure it's running on. And who knows where some of that infrastructure is? You know, you wouldn't wanna be in a data center. You wouldn't want your infrastructure, your cloud services, your data, sitting in a data center that I don't know had something stupid like a wood roof built on it, right? You don't wanna be in an environment that's got something like that going on. And so you end up seeing that there, I think Amazon will have a place. They're not gonna go away. People said the mainframe would be dead one day. I don't think Amazon Clouds can be dead ever. They're gonna continue to grow and they'll have a place in the enterprise. But we're starting to see customers who are saying, you know what, I need an alternative. There needs to be two vendors in the market. I can't just have Amazon because cost is becoming an issue. Support is becoming an issue on the Amazon platform. Performance is really starting to be something that people are looking at. It has limitations to its platform and then control. How do I control each of those environments? And so we've seen a wave of competitors that have been coming up and a lot of them are in our environment and some of them are elsewhere who are aggressively going after the Amazon customer set. And customers are out looking. They're looking for an alternative. They're even saying to themselves, hey, if Cloud is everything it should be, I shouldn't have a single vendor approach to this. I should have a multi-vendor approach. And so you see folks like Joyant who is making great moves in this area, high-performance cloud that has a better cost model. They offer the opportunity to move to private because you can take the whole cloud operating system and bring it in-house. They offer great scale and a competing platform. And folks like Profitbrick, you know, the founders of One-in-One Hosting who after selling the company decided they wanted to build a cloud platform in Europe. They started that. Now they launched in the U.S. You've got Cloud Provider USA, which is a small provider that has focused on the compliant industry. Hey, we're an SSD-paced cloud that is PCI compliant, HIPAA compliant, and we're a great location for software as a service. And then folks like Cloud Sigma who've come in and provided a unique flexible environment where you can auto-scale your applications and you're not stuck with certain, I don't know, pieces of cloud compute. You're not stuck with the buckets that they prescribe to you. You actually can scale and deliver whatever you want to do on a flexible level. And then, of course, we've got HP who's making a great play. And, you know, they're gonna be interesting to watch because the one difference in them between all the other cloud providers is HP makes the gear. At the end of the day, a cloud still runs on gear, and if I'm Amazon, I still gotta buy the gear. HP makes the gear. So I think that gives them an interesting advantage of this space. And then these are a lot of the kind of, you know, lamp stack platform as a service guys who take advantage of Web 2.0, Web 3.0 applications, but we still can't forget the VMware clouds like Blue Lock and Savas and even VMware themselves who are really going after those enterprise applications but still we can't necessarily change. And so you see this really unique blend of all of this and then in the ecosystem of cloud, the software providers who are sitting up on top of all of these cloud services and providing an opportunity for them to integrate at multiple levels. And so it becomes, I think it's this interesting ecosystem to watch, to see the role that Amazon will play and also the role that others will play. And there's gonna be an opportunity for someone to be a winner there, to be the alternative. And I think the company who seizes on that and delivers it at the best value and overcomes some of those enterprise issues that we're looking at, they'll actually be poised to be just as big if not bigger than Amazon. Excellent, so I wanna come back to some of those points of cost, performance, control, and talk about some of the specifics you mentioned, HP. We were at the OpenStack Summit last week and clearly OpenStack hit a milestone. I wanna talk about VMware's move, but we're 22 minutes in. I wanna just take a breath here and let the community chime in. So the way this works, folks who aren't familiar with it, just go ahead and break in, let us know who you are. First name is fine if you don't wanna give your whole name and just ask away and I'll continue to moderate here. So are there any questions or comments specifically that the folks in the community have? I'll just take a break right now and ask that. This is David Sawyer here at Palo Alto. I've got an observation about the whole ecosystem that's being created. And in particular, what I've been very impressed with about the Supermap is your ability to create a ecosystem around particular companies. So for example, the media companies, not too far away from you in Los Angeles. Can you talk a little bit more about that? It seems to me that data should reside close to the prospecting. The prospecting comes with the data. It's very, very expensive to move large amounts of data around the place and takes a long time as well. So what are you doing there to facilitate the reduction in movement of data for particular, particularly enterprises that actually need the same data or use the past data for one place for another place? A couple of things, which is, and it's a great question. And one of the reasons that we've been going after this kind of ecosystem concept. Because of the scale of the environment we've built, it's kind of created an interesting dynamic. It's not about us serving a single particular, it's not about us serving like a single particular industry, but more. Guys, we lost your feed, Jason. I don't know if you went on mute by mistake, but while we're, Jason's just dialing in again. Okay, yeah, so while Jason's dialing back in, let me just mention to folks, if you're not comfortable asking a question on the line, go ahead and tweet me. I'm at D. Volante, or you can, that's probably the best way for, because I'm asking the questions here. I wanted to, while Jason's coming back in, David, just give me the- I'm back in. Go ahead, no problem at all. Carry on, please. Yeah, so one of the things, because we operated the scale we've been able to operate, it's created a sector, a lot of industry sectors. And when you think about consolidating all of those sectors in one environment and consolidating the clouds, you have to be able to support the scale of that infrastructure to move. And so within the data center, we're creating opportunities for these industry segments to execute clouds and execute the movement of data in the way that works best for their industry. Everybody's different. You know, media is a great example. We can talk about some of the things that they're doing by putting their rendering infrastructure, by putting data that they're sharing in our facility, and then taking advantage of our fiber connectivity, where we've got multiple carriers and reaching out to those different markets that they service. They're able to move that data in and out much easier and then keep it there for a long period of time. I think people in this movement of data, one of the things they're forgetting, you know, when you look at a two petabyte data set, which is how some of these data sets, that's not unheard of, right? You look at a two petabyte data set to move two petabytes over a 10 gig line, takes 11 days. That's if everything works, it's not possible, right? So you've got to get that data and co-locate it next to the computer. And so what we've created with the scale of the ecosystem is the opportunity for that data to move within thin advanced speeds, and 100 gig and 40 gig, because you're not bound by the distance limitations and the fact that you've got to pay for all of these carrier circuits. And so we're creating platforms and models based on a different industry for them to take advantage of those two effects on a bad answer to the question. I wonder- Back to the top holding rather than hauling over the internet, just bother back to all. Now that seems to be a very, very sensible model indeed. And I think it goes beyond just the sharing. It's likely that an industry will have data stream coming into it, which are unique to that industry and which they all want to share. And that you'll have data providers as part of that ecosystem within the data center as well. Absolutely. When you talk about backhauling, we talk about throwing cables over the cage. Is it that brute force? Talk about that a little bit. Well, there's two types. So there is the, you know, in essence, the cable over the cage, right? We talk about cross-connected within the data center. That's an important part of it. That's once the data gets there. But when you really talk about backhauling, about getting the data there and being able to store it at scale, that's a different model. And that's where our connectivity ecosystem actually helps our customers. Because one of the things we've done, which is unique is rather than just saying we've got, all right, we've got a lot of providers and you can cross-connect to any one of them if you order services from them. We've consolidated the buying power of our customer base and translated that into savings for our customers. So no matter how big you are, in essence, we're bigger. From a buying perspective in the telecommunications space. And our telecommunications team has the ability to dramatically shift the total cost of ownership of the platform so that customers are saving anywhere between 25 and 60% on their connectivity cost. So these high-capacity circuits move the data to get it there once it's there are extremely low. And so it becomes possible, whereas before moving large amounts of data over these private lines and backhauling it into a location, which is cost prohibitive, because of the diversity of carriers and the ecosystem of buying power that we've created, we call it core, the combined ordering retail ecosystem. Our customers are able to save so that they can actually execute these plans in a cost-effective way. If they didn't have that, it would be possible. And then as they get in the data center and you talk about cloud services sharing with service providers and customer sharing with one another, you talk about that. Then it's as simple as, yeah, the cross-connect over the fiber over the cage, but it doesn't look like that. That's the idea. Jason, Jason, one of the newer, I know I'm simplifying it, but one of the newer value propositions that Amazon puts forth is the ability to go global in minutes as they expand their footprint worldwide. How do you meet your tenants? How do you meet that capability? Can you talk about that a little bit? Yeah, they're doing it in the same way that they've done it before. They're leveraging, even though we have these cloud providers in our facility and they're a part of that cloud ecosystem, those cloud providers are building nodes across the globe. We've got cloud providers who have a West Coast presence in our facility. They've got an East Coast presence, maybe in Napa in Miami. They've got a presence in Amsterdam, maybe in Zurich. We've got cloud providers with a presence in Asia and throughout the globe. So Amazon isn't the only provider who's actually deploying throughout the globe. Others are as well. And the nice thing is in our facility with that multiple choice of cloud providers and service providers. We've got over 40 cloud providers and managed service providers that can do cloud services right within the data center. All of them have a value to our customers in one way or another and they each have footprints in other geos in other regions, just like Amazon's going to promise that same kind of global footprint. Those cloud providers that we mentioned earlier, they're all attacking it in the same way. Okay, again, I'm going to open it up to folks. I've got a couple of questions on Twitter, but let me just stop for a minute and see if anybody else has any questions. Go ahead and just jump right in. Tell us who you are. Hey, this is Peter Daley in Dallas. Hi, Peter. How you doing? Good to talk to you again. Oh, thank you. Jason, quick question. Dave opened up the conversation with the observation that Amazon was at about a $2 billion run rate in 12 and projected $3 billion in 13. Is there any way to do an apples to apples kind of a comparison? I know pricing is different in revenue models and all that stuff are different, but kind of theory of relativity. I mean, how do you, as a collective, relate to that two to three billion in growth? That makes sense. Yeah, no, actually, I get your question. It's one that I'm actually exploring right now. One of the things that we've been looking at is when you look at the collective ecosystem of cloud providers that are in our facility, which is probably unique than any other data center out there. I don't think anybody has the scale to consolidate all these cloud providers in one location, but you asked an interesting question, one that I've been exploring, which is what does Amazon's growth compare to the growth of the multiple service providers that we have? And unfortunately, I don't have an answer right now. Everybody's private, I think even Amazon's numbers, we're all taking a guess at. We're sort of prognosticating what we think it is. And I've heard numbers that, well, they're gonna spin up 3 million VMs over the next year or some number in that category, but I do know that when it comes to processing power, when it comes to storage capability, and you kind of look at it all in one ecosystem, I don't think anything compares to what we have in one environment, but then when you look across the globe, how does that translate with those providers? And I'll tell you what, I'll make this promise, I'm gonna figure out an answer to that question, and then our next peer insight sometime in the future, we can talk about that, like how does a collective compare to Amazon? That might be an interesting topic. Yeah, I would love that metric. I have a question from Aaron Newman of Cloud Checker. He says, Jason, will enterprises go straight to the public cloud, or are they gonna move more slowly to hybrid clouds first? What do you see going on there? Here's what we've seen. They go to the public cloud just to experiment. They take their team and they go, go figure this out. And then the public, the team goes in there and they, they'll spin up some stuff in Amazon, maybe try a few workloads, try Dev and QA, maybe try to test them from scaling capabilities. Right, they'll look at that. Then what they'll do is they'll say, okay, we think we figured it out. And then there'll be some project. There'll be something that is driving this initiative. It is, you know, sometimes the CIOs and CTOs are coming in and going, we gotta get to the cloud and everyone's going, we don't even know what that means right now for us. All right, so they'll find some project that'll drive that, and it will do one of two things for them. It either pushes them into a private cloud deployment, it takes them to the public cloud to try something new, or they actually choose all three. So it, or both of them, where they go, they do a hybrid model, public and private kind of a mixed environment. But what we're seeing is it tends to be a new project, something that kind of makes them look at the way things are differently, and they are experimenting with it differently than they have before. Most of them end up with their first foray in the cloud from what we've seen. Their first foray tends to be some kind of private deployment that is a production environment. And I think the way they look at it, and I think this is the place that Amazon's gonna have for all enterprises, they'll go, awesome, I can do Dev and QA over there in the Amazon cloud, but once I'm ready to, and I know exactly what I'm gonna need, I'm gonna bring this in-house, I'm gonna put it in my private environment, and then we'll be able to run and manage it and control it at every level, because we already have the teams to do it, and it's gonna give us a better cost model anyway. And I think that's an interesting approach that they've been taking in one that has a lot of value. You know, I wanted to mention, I just mentioned Aaron Newman of Cloud Checker. So Cloud Checker's a company, so some of you might remember when Amazon basically made a trusted advisor free for the month of March, trusted advisor is a way for enterprises to take a look at whether or not they're in compliance with best practices, and Cloud Checker did a study of its customers, because Cloud Checker supports AWS, and the number was enormous. It was something like two thirds or even three quarters of the clients that they had were out of compliance in some way, shape, or form, which was quite an astounding figure, but I guess not that surprising. These are configurations, or security settings, and so forth. Jason, do you see that as common in the public cloud or hybrid cloud generally, and how are your tenants addressing that situation? The way they address it is they get out of the cloud. Once they picture it out, we kind of a funny thing. We had, it was kind of an interesting thing. We had one customer, a highly regulated industry, who said, we absolutely, and we were working with one of our cloud providers with them, and they said, we absolutely do not permit any of our developers to use instances in the cloud. It's not allowed, and we have nothing there. And the cloud provider said, really? Here, let me share with you some of your folks that might actually be putting workloads on there, and of course they're blown away, right? This is the rogue IT discussion that kind of came up earlier. In our environment, a lot of the clouds are more focused around enterprise cloud, and although they have dabbled in cloud platforms, the way they're addressing it more so in the data center, as we've seen them tackle it, is they've experimented, and now they're getting serious about it, and they're looking at how they're going to address that, and they're choosing the right cloud. Again, back to the discussion. They got past the white cloud. Now they're going, wait, which cloud is right for this? And I think that's an interesting evolution. One of the security things that we've talked about, physical security within the cloud platform that I think CIOs and CTOs are neglecting, not only are they out of compliance, but let's take the example of my data sitting on some cloud somewhere, and I won't pick on Amazon in particular, but any cloud for that instance, that isn't in the right facility. They take that data, they strike that data across three or four servers, and if one of those servers crashes, what happens? It automatically rewrites to one of the other servers. What happened to that box? It crashed. Who fixes it? Where does it go? You know, does Frank the tech? No offense to guy's name, Frank, but does Frank the tech grab that box and then go home? And then he has all the time in the world, whatever encryption you have on that data doesn't matter. How do you audit that process? And those are some of the things that I think people are talking about in an independent co-location environment where multiple cloud providers exist. You can kind of tackle those types of issues, and that's the way they're looking at it. How do I really, really address this at a large scale and make sure that as I move more workloads into the cloud, how do I ensure compliance, auditability, and tracking in each of those areas? And then in certain cases, there's applications where it won't matter. I mean, I think one of the concerns I would have if I was starting a business today, if I started putting my stuff on the Amazon cloud is that they're gonna start competing with me. I met all on Netflix, right? Here I am, I use this big platform, but now they're competing with me by offering a streaming video service and new TV shows and all the magic that I deliver. I think at some point, you've got to find that competitive differentiator that goes above and beyond the infrastructure. We got a number of questions on Twitter and around pricing, but let me open it up to the community again to just see if anybody's got any questions on the phone line. Go ahead, sorry. It's just David again. I was just saying that it's also interesting to see that new applications are coming into the cloud, which are from the very get-go cloud base. So you take something like Salesforce.com or you take something like ServiceNow, which have come in like a train into a particular area and is replacing half a dozen, maybe 20 applications within a data center and putting them out into the cloud. So it's an opportunity for new business models, new applications to come in. I personally think it's gonna be very unlikely that you're gonna move your current applications to the cloud just to save a bit of money. That doesn't mean to make any sense at all. And they're not built for that type of environment. So it's, to me, it's interesting to see the new applications coming in, the potential, as you said, or web3.o or these new applications coming in and bringing in a new way of doing business. So David, you're saying these hybrids are an extension of the IT or the business process as opposed to just simply a burst mechanism or a lock, stock, and barrel outsource of existing IT. Am I getting that right? That's correct. I mean, burst is useful only when you have a stateless environment. If you're trying to have a situation where the data is in two places, those type of burst mechanisms are very difficult to manage. So for some web applications where it's just pure web serving that you need to do, they can work very well indeed. But if you're trying to set the database between two sides and get that to work, that's kind of tough. So yes, bursting for specific stateless, great bursting in general, unless you've mapped it out very, very clearly beforehand, that's much, much tougher to do. Okay, we have 20 minutes. Again, I want to open it up to the community and make sure that everybody has an opportunity here to chime in. Any questions, comments, share your perspectives, experiences with the cloud? Go ahead, I'll give you a second to respond. This is Scott Lowe, I have a question. David, you mentioned that you're not associating, people move their legacy architectures into the cloud. But I was wondering, from the cloud provider perspective, are you seeing any interest from people wanting to try to make that attempt, but either finding difficulty or finding the soft prohibitive or are people attempting to try to find ways to reduce their on-premises environment for various reasons, with even with legacy applications like ERP? Oh, absolutely. I'm not saying that they wouldn't put those in the cloud. They'll put those as a managed service in the cloud in the same way as outsourcing is work today. So that's happening lock, stock and barrel. And it was very interesting, we did a recent set of interviews with vendors, with users. And some of those had a strategic objective of moving their whole data center to the cloud, and in particular to Amazon. So people are doing that, they're doing their particular application into the cloud, but their objective is to move the whole lot, to keep the data close together. And some people are then planning to put sort of legacy application to the same data center as the other cloud services are in. So again, achieving that closeness of data. So there are a number of different models out there, and a number of different ways that people are tackling it. But for me, the most important thing is keeping the data close, keeping the relevant data close together, and avoiding the cost to move data. One of the biggest costs, for example, of Amazon, is moving the data out of Amazon. It's free to put it in, but it's very, very expensive to take it out again. So that's a piece of a practical advice is, plan where the data is, plan to keep the processing close to the data. Do you mean the temporal locality of the data, or the spatial locality of the data in that sense? Did you hear that question? Say that again? Say that again? Say that again? Sorry, it's a rub from New York. Do you mean the temporal locality of the data, that is, data is typically accessed within the same period of time, or the, you know, in the more type of data sense? The physical proximity, to move that as the station that Jason was explaining, to move a petabyte of data, takes weeks across even the largest enterprise, and it's very, very expensive. So if you're aiming to optimize the geographical proximity of data and processing, what have you found is the most useful metric for it, for deciding what to put, what to put where? Optimizing on your networking cost, with the clearest, the clearest cost, the cost of doing processing, the cost of storing data, it's about the same wherever you are, the cost of the networking of that data. So let's talk about that on that. So let's, we'll get a little background noise, David. Let me just sort of summarize the question. We're talking about the movement of data as a barrier to cloud, the physical movement of data and the size of the data being problematic. And the question Rob asked, what's the metric that you want to optimize? And you're saying the metric is the network costs. Did I hear that correctly? And please carry on and add some color to that. Network cost and the elapsed time for that movement of data, those are the two metrics that you have to build in. Can you afford the amount of time to send it across the network? And can you afford the networking cost? It's just a practical issue and the more that big data is coming in and more about companies within the same industry are sharing data, the more important it will be to essentially use mega data centers to optimize or minimize the cost of transmitting data. And Jason, you are arguing opportunities for moving the code and shifting the computation rather than shifting the data itself. Yeah, so Rob is, that's a great point. You're talking about shipping five megabytes of code or function as opposed to moving a terabyte of data. And that's clearly the sort of new paradigm that we've seen with Hadoop. Any other comments or thoughts on that, David or Jason, before we move on to another question? I know I think you've covered really well. I think the other layer to add onto that is really the idea of how, not just how are you moving your workloads around, but then where are you, what are you doing with that data after you're done with it? Because what we're seeing, one of the mistakes we think people are doing is they distribute their data, they distribute their workloads, they end up leaving the data out there. They don't bring it back to a central location where they can actually then start to do the analysis because like we talked about earlier with big data platforms, the real value is going to be the data that you own. And it's not about the questions you know to ask today. It's what you don't know. It's what you want to ask tomorrow. And getting that data back to a place where you're confused and the analysis of that could be done. So you're seeing one of the things we're seeing is people architect applications differently, right? They're creating these, you know, almost like client-like operating models for the applications and a small amount of data that report back to a central repository where it can be stored and it can be operated at scale. And then that becomes their historical archive, but the transactional piece sits out there. And there's some interesting dynamics occurring in the space right now. They're actually really fun to watch. I think I have the best job on earth. I don't know if anybody else has the same way, but it's a ton of fun to get to see all the things that people are doing. We've got about 13 minutes. There's some ground I want to cover. I want to definitely bring in John Furrier and have him and David Florey talk a little bit about the OpenStack Summit, John, if you're still on. And I've got some questions on Twitter as well and pricing, but another chance for the community, if you have any questions specific for Jason or comments on your own cloud experiences or advice for your fellow peers, please chime in. This is Jeff Kelly. Jason, I wonder if I could just push back a little bit on something you mentioned about some of the real value of big data being in the data that you as an enterprise already own. You know, I would suggest that maybe it's certainly that's a lot of value there in terms of bringing together disparate data within your own internal enterprise. But I think when you really start to combine that with outside data sources or there's market data, social data, whatever the case may be, that's where you can really start to get some, do some analytics and find some insights that can really be key differentiators. And it seems to me that the cloud is actually a good place to do that kind of workload as a lot of that third party data, of course, doesn't exist in your own data center anyway and it may not be something you want to keep in perpetuity. So perhaps the cloud is a good area to do that kind of integration and bringing in disparate data sources from inside and outside the enterprise. What's your take on that? And further speaking of big data in terms of privacy and security, what are some of the implications there that you might be hearing from some of your clients? No, I agree with you wholeheartedly, right? That value of, I think it's the marrying of the two, right? We, and the reason I mentioned it earlier, we're seeing customers that are saying, yeah, I go out and I do stuff with other people's data and I get value with that, but they are not marrying it with their own yet. And to the point you made, the value in these analytics platforms now and in the future will be, how do I marry what I know with what is publicly available out there? And to the point that David was making, in a large-scale environment, in a data center environment like we're seeing and what we've created, there now is the opportunity for the public data that is publicly available and your private data to kind of be in facility. And so what that starts to look like is some of the security issues that you're concerned about when you start to marry your data with public data and then shove it somewhere else to do a workload. All of those security issues, at least from a physical standpoint, get to be removed and even from a connectivity standpoint. We have customers that are patching into publicly available data sets and marrying it with their own private data and then doing analysis and they're never leaving the data center. That's kind of an interesting model and they never had to transfer over the internet and they didn't even have to transfer over private point-to-point lines. It was literally just fiber cross-connects within the data center. And I think you make excellent points about how big data is going to see evolve. Now on what our customers are talking about when it talks about security of moving some of these big data analytics into the cloud, what they are worried about is kind of the point we made before. If I bring a bunch of data into someone's environment and I do analysis on that in their environment and then I move it out, how do I ensure that that data is gone? And so there's an interesting mix of things going on where they're saying, my data will sit here, my compute will be over there and I will leverage the compute but I'm not gonna move my data into the workload. And so that's possible when you're in the same facility. When your data sits somewhere and the compute cloud sits somewhere else entirely, that's not necessarily possible. So there is this powerful concept of a big data ecosystem that's actually evolving in front of our eyes as well. And we're driving it to a certain extent. I mean for all the good reasons that our customers want and for that the market is demanding. But you hit the nail on the head when it comes to big data and all the issues around it. Let's talk a little bit about OpenStack. OpenStack Summit last week kind of hit a milestone. John Furrier when OpenStack came out said, it's a Hail Mary against Amazon. I think he was right about that. Be interested John, whether or not you think the Hail Mary connected. You've got Grizzly coming out, looks good, looks like they're embracing things like ESX and Hyper-V. At the same time, you've got companies like VMware and IBM and EMC and certainly HP getting behind OpenStack. John, I'm not sure if you're still on the call. If you are, I'd love your thoughts and if not maybe David Floyer can chime in a little bit because you were at the OpenStack Summit as well. I'm here. Great. What's your take on OpenStack as it relates to this conversation John? Yeah, I think this is a great conversation. I think Jason mentioned, you know, Amazon. You know, to me, OpenStack really is accelerated by a couple factors. One is the community recognizes that the freight train is coming down the track in Amazon and the sense that, you know, as I said, Dave on theCUBE a while back is, it's rare you see a company like Amazon do, you know, two things. And anytime you see a company succeeding, it's usually one of two things. They're commoditizing, existing marketplace and that's their core value proposition. On the other hand, a company might differentiate on value and be an enabler, an innovator and that's their value proposition. It's very rare that you see a company default at the same time and I think what Amazon demonstrated is that they are out to commoditize the infrastructure at the infrastructure as a service level and at the platform as a service level and that's really a core value proposition. At the same time, they're enabling massive disruption at the innovation of the developer level and then DevOps and ultimately eliminating ops there and killing DevOps at the same time. So that is scaring the hell out of everybody and that's fundamentally causing the big guys to realize that they're under threat and they have time on their side. So you're seeing everyone snap into line, you're seeing things like what Jay is doing at Switch and the Supernap in Vegas, really driving the standard for what people want. They want the infrastructure elastic, they want to manage workloads, an application-centric model with big data applications or, you know, mobile applications or whatever application, the certification. So clearly OpenStack is the answer to give enterprises the ability to do their own cloud and build fast. And the fact that it's open source and scale out, really the testament to one of some of the things we've been covering in the topics that are most interested by the AlphaGeek is how do I build open source based code, code, scale out infrastructure? And so OpenStack is the beginning of that journey and still not faked out, but certainly, you know, the work that HP's done there, it's been awesome in Rackspace, obviously getting into Halo effects. So, you know, the event was fantastic. It was high signal, not a lot of noise, a lot of developers, a lot of interest in the enterprise and service providers. So I would say it was a fantastic event. But again, you know, not even top of the first inning and it's a good sign in my opinion. Yeah, I think it's clear that most of the activity in terms of deployments for OpenStack is with the service provider community, even though OpenStack gave some, the community gave some good examples, Comcast, Best Buy Others, but cloud service providers are clearly picking up on this. It's almost as though you got, you know, the public cloud guys, you've got the private cloud guys and OpenStack is really sort of, you know, filling that void in the middle. The question on Twitter, Jason, you mentioned HP before, really owning or developing its own infrastructure and using that for the cloud. Question around pricing, how far can pricing come down on infrastructure and is this going to lead to this notion of a software defined or what Wikibon calls a software-led infrastructure environment? It's interesting to, the nice thing is we get to watch this space and we go, oh great, here goes the race to zero. And then the question is will it bounce, right? Will it go down and then will it bounce? Will people realize that this is sustainable at some point? I think where you're going to see people hold their pricing is on the value that they're going to deliver. Yeah, you're going to have Amazon doing monetize and continually to ratchet down pricing each month after month, right? And in the way that they've been doing it. But then you're going to have others come in and go, yep, ours is a little bit more, but you're not going to pay for this and you're not going to pay for that and you're going to be able to get the following extra benefit. And so I think people will differentiate which we've seen forever in that space. HP, I think, you know, and tying them into what they're doing with cloud and even with what they're doing with OpenStack, I think it's kind of an interesting one to watch. Yeah, I like what Dave, I would like to do it. Oh, yeah, go ahead. Oh, yeah, Dave, I would agree with Jason on that, is that you look at the commodification. You know, I once called Amazon the junkyard, cloud where you come in, build your own car, build your own, you know, cloud. They've gotten so much better and they're doing so many new announcements. It's really much better. However, you know what HP's doing, for instance, but Jason's talking about that's the value play. The value play here is to give the same functionality and differentiate on that different value. Value is doing it with a legacy app. It's doing it with workloads. There's a lot of details that, quite frankly, aren't being filled for a lot of the enterprise, meaning that they just can't turn key cloud the way you can do on the public cloud. So there's a new atmosphere and I think OpenStack speaks to that and you're seeing some of the major initiatives that obviously I'm seeing and CIOs that I talked to, Dave, saying the same thing. Hey, you know what? I have NetApp here. I have EMC drives. I have all the stuff. I gotta make it work. Now, I might throw away it over time, but right now I'm not gonna just trash everything and just move right to a pure cloud environment. So I think it's important to understand that the value side is really relevant in the enterprise for those type of workloads. Yeah, and what we're seeing too is, as we see the evolution of OpenStack, I think it's gonna give enterprises some tool sets, tools that they're looking for. We've got one customer who is a very large scale. They actually provide a service to their customers. They're a service provider, but they're not an infrastructure service provider. They develop a web scale platform that allows small businesses to take advantage of the tools and software that they kind of presented them from merchant services, you name it, right? So their end customer has no idea what they're using behind the scenes. They just want the stuff to work. And they have thousands and thousands of customers. So managing the infrastructure is actually a big challenge for them. And they decided not too long ago to just standardize an OpenStack. They run their infrastructure with OpenStack to deliver their service. And their journey has been not without a speed bump, but they've been able to execute and they're doing very well at it. But even with the OpenStack framework, they're finding that they've got hardware that doesn't have drivers to support OpenStack. It doesn't, we're back to the same discussion, right? It is a new operating system. And I think that's kind of what we're seeing. We're seeing new operating systems come about that will have a different name besides Windows and iOS and Linux. They'll be some of the same players, but it's going to be a new operating system. That's the way we've been looking at it. Yeah, I just read on SiliconANGLE that the... I've been coming at a very fast rate. Havana is coming six months later. And if anything, an increasing rate to all the development of those new platforms. All right, folks, we're out of time. To the last point, I just read on SiliconANGLE, the Mozilla OS phone is out. So yes, to the new OSes and new models. We're basically out of time. And really appreciate everybody participating today. I want to thank Jason Mendenhall for his time and others who joined in. David Floyer, Peter Galey, a good friend from Dallas, Aaron Newman, Scott Lowe, Rob from New York, Jeff Kelly, John Furrier. And also appreciate all the effort that was put into making this bi-coastal event possible. It's not over yet. We're turning the stream over to the SiliconANGLE studios down in Dallas at the top of the hour. They'll run news desk for another hour, news of the day, so watch that. At 2 p.m. East Coast time, we have a flash special, a flash cube, if you will, where we're going to continue this bi-coastal event up on Wikibon. You'll see the folks that we have coming in today. We've got Steve Mills. We've got Brian Bukowski from Aerospyke. Steve Mills from IBM, of course. We've got Don Basile, who we've got, you know, on video from a previous show. And we're going to be running an event around flash storage, focusing on hyperscale, focusing on how enterprises are going to adopt flash, what it means for productivity, what it means for database design. That's 2 p.m. East Coast time. Watch live on SiliconANGLE.tv. Just as a reminder, we'll have, by tomorrow afternoon, up about six research notes on this call today. So please look for those. Go in, hit edit, make improvements, put up your own note. We really appreciate everybody watching today. Again, thanks to Jason Mendenhall and everybody else who participated. Thanks for watching everybody, and thanks for being a Wikibon member. We'll see you next time. We looked at all the programs out there and identified a gap in tech news coverage. 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