 Ladies and gentlemen, please welcome Research Manager, Global Cloud Computing 451 Research, Agatha Poon. Good afternoon. Thank you for joining this session. I figure before I start, I just want to give you a little background information about myself and my company. So I have been in this research industry for about 15 years now, covered multiple topics from the legacy voice, data, managed services, IT outsourcing to now cloud computing. So as the industry evolve, so that's my resource focus. And I think it's actually quite interesting because I enjoy being an analyst. That's the flexibility and being able to learn new things all the time about my company. So 451 Research, 451 Group is the group company and then underneath we have 451 Research. It's a technology research firm. And we are 14 years old now. Our headquarters is in New York, and we have multiple offices in the states, myself based in Boston. And we have other analysts in San Francisco, Washington, D.C. And we also have analysts in London and with uptime interest, which is our sister company. We also have offers in Singapore and Taiwan. So 451 Research, we are sort of like a mid-sized small company. We have about 260 past employees, 1400 past customers ranging from enterprise users, service providers, vendors and investment firm. And just like any company, we grow organically and inorganically. So throughout the years, we made a number of acquisitions. And last year, actually late last year, we acquired Yankee Group, which is my previous company. And then we also have two research firm, one called Infopro. They focus on focus group and really talk to the IT decision makers to understand their IT strategies, their budget plan, their technology choice, their roadmap. And I will share some of the data and information with you later on. And the other research firm we have is called Change Wave. That one is more the traditional online survey house. So we think that with that, we have a pretty good picture in terms of how we look at the market from both the supply point of view as well as the enterprise or demand side of view. So that's how we actually generate our reports as well as our services. So today's topic is OpenStat. I'm sure that you heard a lot about OpenStat. A lot of the case study, bad processes, use cases. Before we actually get into some of the lessons learned from the early adopters, I think we really need to take a step back to really ask ourselves, why should we care? So that's really a very interesting situation that the market dynamic is moving quickly. We have obviously a growing ecosystem and we have enterprises. They're also very interested in getting into the cloud, so we will talk about that. And of course, the other topic is how big the cloud is, how big OpenStat could be because now a lot of interest around OpenStat. But at the end of the day, I'm sure that you will be interested in knowing how big the size of the market could be. So we will kind of touch on that as well. And then we will get into some of the examples from service providers and vendors. And I think the examples are very unique because those are the companies that actually take OpenStat and productize the service and deliver it to their customers. So it's a commercial production type application as opposed to internal use. And then we will wrap this up with the key takeaways. So OpenStat, in the state, we talk a lot about OpenStat. Every single day is really, really sexy and people love to talk about that. In Asia, we also see a lot of different activities. But as we all know, Asia is a very diverse market. So I think it's very difficult to generalize the development. So what we try to do is to group this country with similar characteristics into one bucket. And then we try to, you know, identify some of their, you know, development. So if you look at the right-hand side, the blue box, we call this is kind of like the group of countries. They are well-developed countries, East Asia, and Pacific countries, which include South Korea, Japan, Australia, and New Zealand. And this country, we see they have a very sort of like similarity in terms of how the company, how enterprises, and how service providers are moving. They are all in the transition mode. So they are in the transformation stage where they try to look for solutions and business models that can help them to streamline their operation. And obviously, consolidation is ongoing. So with the consolidation, they begin to identify new technologies, new business models. And in the context of OpenStack, and it's still in the early stage, I mean, we say it's still a very steep learning curve, but we do see a handful of commercial deployment driven by the local hosting cloud and managed service providers. In terms of the early adopters, we see pretty much being used by academia. So they use OpenStack wisely for their research, for developing their projects, in private, in public, and hybrid mode. So it's quite interesting, a lot of activities basically in the education sector. As we move to the left-hand side, especially the orange box, it looks like an orange and brown orange box. We identify two countries. Those are the two largest in Asia Pacific, China and India. And I think if you join this morning's session, you'll already learn actually a lot going on in China in particular. I think that has to do with the government support. I mean, the government really plays a major role to drive a lot of new technologies, which is their way to boost the economy. And in China, I think there's really a lot of cloud computing projects and initiative spearhead by the government, by the state government, by the local government. India the same way actually recently, I think the government make announcement that they will have their government cloud, which is a big project because this is the way that they realize the value of the cloud and the goal is to have all the government agencies to use cloud computing as their IT infrastructure. For the providers, China is quite eager to prioritize open-stab-based services. Early days, we have Sina, basically the app engine is based on open stack. And this morning, we have a couple of examples from Baidu and Tiku360. They're also, you know, eager to implement open-stab. Now in India, it's slightly different. We actually, I haven't seen any commercial deployment from service provider. I mean, if you heard any, let me know. But I haven't seen any commercial deployment yet. Most of the activity is being driven by global technology vendors like IBM, HP, Microsoft. And of course, the reason for that is because they identify India as an emerging growth market and they really want to invest in it. And in terms of the early adopters, in these two economies, typically the academia and the public sector. So the government also are the biggest user for cloud-based services. If you move down to the green box, which is emerging RCN are the South Asian economies. And in particular, you know, Malaysia, Philippines and Vietnam, they already been identified as the outsourcing alternative if, you know, companies don't want to go to India or China. So that have, you know, a major impact in terms of how the economy or how the country will develop because that will drive innovation, that will drive investment in infrastructures. Very often, when we look at some of the other South Asian countries, we typically think they are quite bad work or underdeveloped. But here is just an example. Actually, Surinankar is leading the South Asian countries in terms of the human development indicator. This indicator is as a matrix being used by United Nations to measure the level of advancement of a country based on the knowledge of the people, based on their living standards, based on their life expectancy. So I think, you know, it's always exciting to see, even though some countries we consider as underdeveloped, but that could be, you know, one way to look at it is that's also an opportunity out there for service providers and even enterprises. For the adoption, we obviously tend to think OpenStat is more geared towards service providers. So it's the tools for service providers, implement and deliver services. But we actually, we do see a lot of interest from enterprises. And as I mentioned earlier, we have a survey house called the Infopole, and they did some focus group, probably about 80 to 100 IT decision-makers and tried to understand their appetite for OpenStat. So this one is just a general picture. We look at the survey participants and just kind of summarize their car journey. When we ask all these enterprises, you know, in terms of the IT infrastructure, how far they go, well, typically we look at the different steps, you standardize the environment, you consolidate and you virtualize, and of course the next step will be automation and orchestration. So over 60% of the enterprise right now actually already, you know, gone through this virtualization stage. So the maturity, you can really see the maturity after virtualization. And they really get to the stage looking for a way to automate the process. As we all know, without automation, I mean virtualization obviously doesn't really show much value. So now enterprise really sort of at a stage you evaluate different tools and management platform that can help them to bring their infrastructure to the next stage. On your right-hand side, you see a number of the, you know, vendors. Those are obviously the best of great and the leading, you know, technology vendor, which just to reflect that they have a very close relationship with enterprises. I mean they usually treat them as partners. And so for them to support OpenSTAP will have a major impact on how enterprise see, you know, different options, different technologies choices. On your left-hand side, you know, the upper part is kind of like the pinky box, which kind of show, you know, for enterprise we ask, so what are the major barriers for you to preventing you to move forward? And if you see all the reason, actually it's not about technologies. It's really more about business-oriented reason or operation. So you have to deal with internal politics. You have to deal with, you know, whether you have the budget to do that, whether you have time, whether you have the, you know, the resources, human resources to do it. So, but, you know, obviously, technology is not a major concern for a lot of the enterprise at the moment. The next slide I want to show you also very exciting is when we ask enterprise, you know, just off the top of your head to name, you know, the most exciting vendors, technologies and initiatives. And as you can see here, OpenSTAP is, you know, one of the top five. Now, it's a big deal because even though the top, they're not the number one, but if you look at other vendors being selected, they are all, you know, major, well-established vendors and they already have very mature technologies. And as we all know, OpenSTAP is only three years old. So within, you know, in these three years, you have to achieve that kind of awareness and acceptance among enterprise and that obviously is significant. And most of the enterprise said, the reason why they like OpenSTAP is because of the, you know, just like, you know, just like you guys, you know, because of the community they really enjoy, the community allows them to get a sense of trust, to get a sense of visibility, security, and they also believe that will help reduce the fears, you know, about vendor login. The two verbatim that I think is interesting I want to share with you. When we asked, you know, enterprise, why do they like OpenSTAP? And, you know, one of the, you know, participant, you know, answers, of course we are not identifying the name of the company, but it's from a large enterprises in the, you know, the business accounting engineering sector. And he said, OpenSTAP is very exciting. We continue to use VMware for traditional environment. Now, I think that is important because that show enterprise looking for OpenSTAP or, you know, new technology is not replacing existing investment they have. Obviously, VMware is the existing investment they have. It's not replacing. So OpenSTAP is complement other technologies as opposed to, as a replacement. And which also showed the maturity of enterprises because you need to really understand the feature set, the function, the value of each platform in order to be able to, you know, to put the right workload into the right platform. The other, I think also interesting is, you know, one of the large enterprises in the finance sector said, we use a shaft for the orchestration layer in a bunch of other stuff. And OpenSTAP is being examined to convert it to some layers. So this also tells you that, you know, actually, enterprises are very familiar with OpenSTAP technology. So the comfort level is there. So with OpenSTAP, it's much easier for them to accept as opposed to other proprietary technologies. The next slide kind of shows you the roadmap of some of the enterprises. When we ask them, you know, moving forward, you know, where are you going to, you know, put your money on in terms of spending for your IT infrastructure. So we ask lots of the enterprises because they are still pretty much in the on-premise private cloud environment. So we, you know, look at, you know, so what's the next step for them in addition to building a private cloud within their own data center? And you can see here, automated server provisioning, almost 50% already, you know, put money into. So the next step, as I highlight with this little box here, for them to really look into invest is cloud platform and orchestration stack. That, you know, obviously is an open book. I mean, they can be cloud stack, they can be OpenSTAP, they can be, you know, a modern proprietary platform. But, you know, that's sort of like the stage of the enterprise as they move forward with their IT infrastructure plan. So when we talk about enterprise, you know, all this excitement, obviously, you can imagine on the supply side will be even more exciting. This is just kind of like a snapshot. Obviously, it's not exhaustive, and it's not all the logo there. And as we all know that the ecosystem continue to grow, and I think right now it's over 300, you know, companies already getting into this ecosystem. And so we do believe that the ecosystem continue to grow with many different service providers, you know, come into play. And you can see here, there's some provider that really take OpenSTAP as the architecture or API to deliver services to their customers. Some other providers, like vendors, they will take OpenSTAP as a component and integrate it into their product and bring it to their customers. And then we also have another set of service providers come in as a consultant or professional service providers that they provide services, managed services around OpenSTAP. So it's really fascinating, you see the whole ecosystem is growing. And also, important to know is even though we have so many different players here, they're not necessarily competing with each other, as we all know. I mean, they can work very nicely and seamlessly to deliver services to their customers. The next one, I want to show you just the market sizing. There's always an exciting one for especially service providers, you know, how big the market could be because I make a lot of commitment there I want to get the return on investment. So this is a forecast that we've done from being done by our market monitor team. It's a bottom-up model. So what that means is they talk to every player who are in this, you know, OpenSTAP services or strategies and then understand, you know, what's their strategies, their portfolio, their future plans, and based on that to come up with, you know, obviously our assumption methodologies and the forecasting model. And you can see here the size of the market is still small, less than 400 million in 2012, but we expect it will grow rapidly throughout the time, and by 2016, it will exceed 1.6 billion. And by the way, this forecast doesn't include company take OpenSTAP and put it in the internal environment so we don't count, you know, on-premise, you know, OpenSTAP-based private cloud. In terms of the segment, here we see the OpenSTAP service provider actually account the bulk of the revenue so we can imagine Rax Bay is going to be one of the, you know, major leader and major players in this segment, but we do believe it's going to be strong uptake in revenue especially from OpenSTAP distributors, you know, companies like Red Hat and Canonico. So you can see the revenue share we expect to grow, the total revenue share actually, we expect to grow from 3.5% in 2012 to 8.4% from this OpenSTAP distributor segment. The CAGR is very healthy growth, 43%, so that's obviously a good news. This is just another way to look at the market sizing and we just kind of like break it down into the different segments so you can see which service segment contributes, you know, the revenue to make up the total market. And on your right-hand side, you see the different category, we have about seven different categories of the service currently provided by service provider, by vendors. In terms of the number of vendors, in our forecast is close to 60 and as I said earlier, we have 78% of the revenue share generated by OpenSTAP service providers followed by OpenSTAP distributors and obviously it's a second, really distant second, you know, for the OpenSTAP distributor but that also shows you, you know, the mix of the market. I mean, we expect the share for the OpenSTAP service provider will continue to decline and the share for other, you know, service segment will continue to grow. So, so far we talked about OpenSTAP is a very exciting, you know, sort of like conversation among service providers and enterprises and because of the openness and because of the community and the beauty of the community is be able to share, be able to collaborate. So with that, actually I have to co-order to the company that I'm going to share with you because they are opening to share their experience about, you know, how they use OpenSTAP, how they productize OpenSTAP related product. The first one is Aptira. So Aptira actually just recently become a gold member if I understand correctly. So congratulations. Aptira is based in Australia. It's managed services and hosting providers and they have a product is based on OpenSTAP it's OpenSTAP based private cloud and in addition to the private cloud they also provide bespoke deployment and consulting. So according to them, they actually took more than a year to productize the product. So obviously it's not like, you know, plug and pay, you know, out of the box you can just put it in your environment and it run and it really take a lot of time and they believe it's a continual ongoing effort because of a long development cycle. In terms of the challenges they see because the product is still immature so they have to overcome the immaturity of the product and also identify currently lack of the real testing performed on the code base as one of the challenge. The other one is to make sure the patches run against production site and not that stack. They consider that it's very important. For the key lesson learned it's interesting because I talked to Tristan. By the way, is Tristan here? Oh, okay. So, and he, you know, just gave me this answer. So I just gave a direct call. You know, I'm not going to interpret and rephrase it. So Tristan said, you know, you're insane to blindly follow release. I think it makes sense because basically you're insane to blindly follow anything, right? And with an open environment that's a lot of changes and that's the beauty of the open environment because you can get your hand dirty and try to make changes that really adapt to your environment and best benefits your users. And for them, in terms of the customers, they have about 10 deployments. Six of them are based on the existing offerings of the existing standardized open-stab-based private cloud and then the other four, they deploy with other partners because they do have a network of the partners that support open-stab-based services. So obviously, I think it's important for any service provider to build an ecosystem of partners that can complement your services and also help to bring a total solution to the customers. For the use cases, they have, you know, a variety of use cases. Some use it for DAP test, which is a very, you know, typical one, and then some use it for proof of concept for scalability and federation and also others use it for collaboration research as well as data analytics. So for Aptira, I think the next step for them is to grow the company because the company is still relatively small and it's self-funded, so they want to raise additional funding that they can help them grow and, you know, become the sort of the de facto open-stab service providers in India and across Asia-Pacific. The next one I want to show is Huawei. And I think Huawei also recently become a gold member of the open-stab foundation. And they have a product by the name Fusion Cloud. And the first release of Fusion Cloud actually is Fusion Sphere. R3 C110, which is the product that's based on the open-stab component, which is a virtualization platform within Fusion Cloud. And the next release, they will have Fusion Sphere R5 and that will be based on the entire open-stab, you know, stack and components, so including the Compute Network Storage and Management Services. Obviously this company is a big company so they can afford to have a lot of commitment in terms of the human resources. So they have over 1,000 engineers involved in the Fusion Cloud project. For them, because they use this product to go after the enterprise market, so the challenge for them is to when they work with the open-stab is they think it's lack of enterprise-ready features. So they have to do a lot of the sort of customize, incorporate some of the existing enterprise-level features into open-stab. And they also have to make sure the compatibility of the underneath virtualization platform. For the key lesson learned for Huawei, they think the really important lesson for them is being able to experience and to understand open-stab and the strengths, the weaknesses and that's important. Learning from your mistake and you're able to make it better. And the other lesson that they said is around addressing issues related to software upgrade and business migration. Customers, they do have customers now. The product has been happy now for, I believe, about a year. And they see tractions in the telco and the entertainment sectors. Obviously, the telco segment is a really strong segment for Huawei and they continue to bring new solutions to this segment. And also working with the top three Chinese telco carriers and obviously you know who they are. And they said they also have more than a dozen POC around the group. So for Huawei, the next step is really to bring open-stab to their providers, customers, to the enterprise customers. And the ultimate goal is to become the open-stab enterprise solution providers. So every, you know, service provider have a very aggressive goal, huh? The next one, NTC Communication, this is a very interesting company. It's an incumbent in Japan, right, telecom providers. But they actually made a lot of acquisition and investment in the cloud space. If you recall, they acquired dimension data. They acquired op-source. They acquired Blue Flyer. And that's how they kind of work on their cloud strategies. And right now they're really investing in open-source technologies and also big on SDM. They have a product at the beginning. It was just a validation or verification of that product. It's based on open-stab and they have about 80 engineers, you know, work on the project. And they said they contribute 450 patches. And for that project the primary use case is really to create office migrations and to support festival virtual office environments using open-stab as the underlying, you know, infrastructure. And this project actually recently just become privatized and they release the product targeting the third universal one which is the networking customers using this product. So they already release a new product just less than a week. For them the challenges as a service provider they consider error handling and transaction processing is the major challenge. Also they have to build a multi-plug in in order to address issues associated with the concurrent use of multiple modules. And now the challenges they think they need to constantly, you know, deal with the error, I mean fixing the bugs because, you know, always have that problem when they do the internal testing. Now that could be a problem because that really slowed down the, you know, the development process. Key lesson from NTT. They believe the community-based open-stack currently lack error processing function which is very crucial for service provider indispensable. That's the way that they describe. So, but they also think the community itself can be valuable because with the community they can bring, you know, expertise they can bring contributions and they can use this community effort to, you know, to develop the function as supposed to do it themselves because that will tremendously reduce the development cost. In terms of customers because the product is still relatively new and so we probably have to wait and see, you know, before we can make any comment. For the next step, NTT will be focusing on enhancing the service functions to support the internet users between and across their business, across their enterprise customers. The last one I want to show you is an example is Inovance. So Inovance is a European-based company. It's IT service providers and they, you know, have multiple product and one of the product is called Yeno Cloud which is their IAAS infrastructure as a service platform as a host of platform and so they use that platform to support their customers but they also provide consulting and managed services. They said they talk about three months. They actually get the platform up and running but that's not the end of the story actually that's just the beginning of the story. They said they actually have to take one year to reorganize engineering around the notion of continuous delivery so in order to make it work to support their customer base, they need to, you know, make changes to get improvement. For this product, we have about the whole team basically the entire development team, about 25 employees involved in different various OpenStat project and also, you know, being considered as one of the top 10 contributors to OpenStat for the past three releases. For them, the implementation challenge obviously as we, you know, highlight and many, you know, presenters also, you know, talk about is the gap, the features gap we have. Another challenge they think is more not related to technology, it's more about business operation is, you know, how to manage the growth while maintaining the core value and be able to evolve at their own pace. For the key lesson learned they say, you know, the most important thing is to stay agile and you need to be flexible. Now, I think it's easy for a small company to do it, to stay agile, to stay nimble to adapt to the changes because this ecosystem is going quickly technologies is going quickly so you have to be really flexible in that sense. And the other lesson learned they think is to think out of the box. I think that's important for any innovator because you know, you just want you just don't want to be another service company you want to be able to distinguish yourself using your technologies and your your skill that match with the customer requirement. In terms of customers, they have about 200 customers. Now, not all the 200 customers are on this Eno cloud actually, the Eno cloud itself is not a revenue generator so I think the 200 customers is a mix of the consulting business, the management services business and the hosting business and some of the reference customers here including the public cloud for CloudWort and the private cloud is an open step for suffering more for. Again, they consider Eno cloud as a demonstrator to demonstrate the technology know-how to their customers as well as a way to validate its development. And moving forward for in events is to continue to expand the operation. Right now, they're still pretty much European based so they want to run Europe and they want to replicating the business process as much as possible in many different geographical locations and the primary focus for them in 2014 is to grow the existing customer base outside of Europe. So, we talk about different example, we talk about the perspective for enterprise and we talk about service providers. It seems like there's lots of excitement around open step but not without challenges as we all know and here we just highlight a couple. We think it's important need to resolve and it might not be resolved overnight. The first one is open step talent. Obviously, we still need talent to really contribute to the community and this is one thing a lot of especially service providers can't hesitant to move forward because they don't have that kind of skill and expertise. Limited functionality, we talk about that many times, you know, still some of the features they think it's not enterprise ready, some of the features they think, you know, they lacking because, you know, it's not terror to service providers so it's continue to have to add, you know, service features and functionality. Fragmentation within the open step community. This one actually is quite interesting because the community is quite big and everyone have many different idea and, you know, you're you change the code and, you know, there's no validation in terms of the hardware. So with all these, you know, different opinions and contribution, I mean, what's the best way to sort of like to consolidate all these comments and I think right now the foundation try to do, you know, a better job in terms of documentation but I think there's still more room for improvement. And then the last one we think, you know, obviously we need more production type, you know, example because that is a proving example to demonstrate, you know, the strength and the feasibility of open stack. We do believe that, you know, these, you know, challenges will continue to evolve and some of them may not be overcome overnight, obviously but, you know, it will get resolved with the community effort and, you know, who's going to be taking the need, I think, you know, there's no such thing as only one group of the, you know, users that are going to take the need. I mean, because it's a community effort so we believe that everyone will play a role. So with that, that's my, you know, key takeaway. And the number one is we talk about enterprise and obviously enterprise have, you know, high interest. They're very interested in the open stack model because of the open environment, because being able to, you know, to be in control. So we believe that will be a continued driver for the new project and we also think the convergence and the crossover of enterprise and service providers will present opportunity to vendors to serve, you know, both parties. We look at the example, there are a number of handful of the commercial deployment in Asia Pacific but the market, we believe for open stack is still defining itself right now. For the market sizing, we look at earlier, global revenue for open stack is still relatively small today but we expect them to grow rapidly. And if you remember, the CAGR is 43%, so it's a very solid healthy growth over time. And last but not least, the demand for open stack expertise and experience continue to present a challenge. So it really need their own contribution to, you know, obviously contribute your expertise and your experience around open stack to the bigger community and that's the key. Now for those who are very interested in, you know, continue to learn about open stack, I recommend two reports which one is our long form report called the open stack tipping point. We have a couple analysts focused on, you know, talking to open stack vendors and ecosystem so they have a very deep insight in terms of the current market status and, you know, the trends, the drivers and the challenges. And if you want to understand more about market sizing, I would recommend the second report, the market insight report called open stack related business revenue. I'm not going to read the whole title but that basically is a report to detail the methodologies of the market sizing that I just highlight earlier. So with that I'm going to conclude my presentation. Thank you very much. If you have any questions, feel free to ask. Okay. All right. If you have no questions and I think we can end it earlier, we still have nine seconds here. Thank you very much.