Randy Bias, Co-Founder & CTO, of Cloudscaling on the myth of "Enterprise Clouds".

1. Enterprise Cloud Myths
Randy Bias @randybias
March 8th @cloudscaling
Cloud Connect 2011

2. Are Enterprise (IaaS) Clouds a Mistake?
Public or Private Clouds Built in the
‘Enterprise’ style

3. The Myth
“We need Enterprise Clouds because ...”

4. The Myth Continued
Enterprises need more ... FUD??

5. The Fundamental Assumption in the Myth
vs.
Legacy Apps Greenfield Apps

6. Enterprises Love Commodity Clouds

7. There Are Two Battles Waging
Commodity Clouds
Enterprise Clouds

8. The Battle Lines
Public vs. Public
Public vs. Private

9. The Error in Cloud as “Outsourcing”
vs.
Public Private
vs.
Where are the cost savings? “multi-tenancy?”

10. The Enterprise ‘No Clothes’ Moment ...
Where is the enterprise cloud business model
equivalent of Amazon Web Services?

11. The Amazon Model is Winning
$1.0B
$0.5B
$0B
2007 2008 2009 2010
2011
$300M
$150M
$0M
2009 2010 2011
2007 2008
Source: Public estimates from Cloudscaling/UBS & RAX earnings statements

12. AWS 5-year Projected Revenue at
100-50% CAGR
$11B
$8B
$6B
$3B
$0B
2009
2010
2011
2012
2013
2014
2015
2016
Source: Public estimates from Cloudscaling & UBS + Cloudscaling estimates

13. AWS Growth & Momentum is Staggering
S3 Published Growth Numbers
700B
655
525B
350B
175B 262
102
0B
3 14 40
Q4’06
Q4’07
Q4’08
Q4’09
Q4’10
Q4’11
Source: Public AWS blog & PR announcements

14. The Starkest Example Possible
(‘Private’ Hosting vs. Public Cloud)
Q/Q % growth rates
40%
30%
20%
10%
0%
Q4’08 Q1’09 Q2’09 Q3’09 -10%
Q4’09 Q1’10 Q2’10 Q3’10 Q4’10
RAX Cloud RAX Hosting
Source: Public RAX earnings statements

15. Commodity Cloud as % RAX Total
Revenue
20%
13%
7%
0%
2007 2008 2009
2010
2011
Source: Public RAX earnings statements

16. The Punchline?
Enterprise Clouds Have Greatest Investment
$30B
$23B
$15B
$8B
$0B
2009 2010 2011 2012 2013
Commodity Cloud Enterprise Cloud
Source: Cloudscaling estimates based on public data (conservative)

17. What’s Different About Commodity?
Attribute Commodity Enterprise
H/W Cost Optimization
Homogeneous &
standardized
Design-for-Failure
Self-service, low friction
Scale Engineering
Open Source
Cloud-oriented Biz Model

18. Initial Capital Expense:
Enterprise vs. Commodity Cloud
$1,892
$2,000
H/W Cost per $1,500
Sellable
‘VMU’ (1GB
$1,000
RAM, 1 vCore)
$500
Commodity $225
Enterprise $0
Source: Cloudscaling confidential financial models for IaaS clouds

19. Labor Operational Expense
Enterprise (300:1) vs. Commodity Cloud
(1500:1)
Servers : IT Headcount
$150M
$113M
$75M
$38M
$0M
Year 1 Year 2 Year 3 Year 4 Year 5
Commodity Enterprise
Source: Cloudscaling estimates based on known IaaS deployments

20. The Evidence Suggests ...
Go Commodity
Serve Greenfield
“Cloud-ready” apps
Embrace the Change