Thinking Out Cloud

Behind the Smokescreen

As some of you may know, Dreamforce, Salesforce.com's big conference, is going on this week in San Francisco. This morning I received an amusing email from Chris Harrick, VP marketing at SugarCRM. I'm assuming this was sent out to everyone who signed up as press to the event.

Funny stuff.

The full email is below (I added the link to Benioff's book). In any case, I'll see you at Dreamforce!

Hey Geva,

Marc Benioff has a few zingers for SugarCRM in his new book Behind the Cloud:

“We knew that we had truly emerged as the market leader in the eyes of the industry when we arrived at Dreamforce 2006 to find that a handful of employees from a small CRM company had set up a mock protest outside the convention center. I’m not really sure what they were protesting, and it was a small, low-budget, and poorly executed rip-off of the types of tactics we had invented, but that wasn’t the point. The point was that we knew not to get ruffled.”  

                                                                        - Page 65 of “Behind the Cloud”

We are sorry we disappointed Marc during our previous visit to Dreamforce.

He even challenged us to “step up the innovation”:

“We did not want this company to get free PR on our coattails! Ignoring this escapade worked well. A blogger asked a Dreamforce attendee if she had seen what was going on outside when she arrived, and she replied that it must have been some kind of Salesforce.com stunt. (Note: if you are going to compete with someone at his or her own game, always remember to step up the innovatio

            - Page 65 of “Behind the Cloud” by Marc Benioff

If you insist Marc.

In continuing its long love affair with the industry’s most down-to-earth CEO and our commitment to staging “small, low-budget, and poorly executed rip-off [tactics]”, SugarCRM is currently distributing 1,000 copies of “Behind the Smokescreen: The Untold Story of How Salesforce.com Still Manages to Sell 1999 technology 10 years later” at Dreamforce today.

You can get your hard copy on the sidewalks outside Moscone (look for the people dressed as big books;).

Or you can read the eBook here: www.sugarcrm.com/smokescreen

With an endorsement from North Korean leader Kim Jong II (“A great guide for any entrepreneur, CEO, or Head of State looking to promote openness and freedom”), Behind the Smokescreen is a response to the magical Salesforce.com marketing that has transformed the company’s service from .com ASP to On-Demand SaaS to Cloud Computing without being apple to run its service on Amazon EC2 ,Microsoft Azure or other cloud services.

To celebrate the release of the book, SugarCRM is offering a free data migration for Salesforce.com users through the end of the year. Registrants will have a chance to win a free Motorola Droid.

SugarCRM hopes that the publication of this book “step[s] up the innovation”.

Please contact us if you would like more details. (510) 501-7333

Regards,

The Sugar Team

“There is a Japanese belief that business is temporal, whereas relationships are eternal. That’s true, One day you compete. The next day you partner. One day someone is your subordinate; the next day he or she may be your superior. At its finest, business is friendly competition, just like a game of tennis.”

                                                                                                       -  Page 39 of “Behind the Cloud”

And I grabbed this picture from the CRMOutsiders blog:

Application Lifecycle in the Cloud

Cloud computing is having a profound effect on the software application lifecycle.

Almost every phase of creating and rolling out software applications is now addressed by a growing number of cloud services: from prototyping, to development, testing & QA, continuous integration  -- and all the way down to staging, deployment and post-production (monitoring and management). All of this can now be done in the cloud.

The vision is compelling. Imagine a world in which programmers can access their development environment from any computer without having to set up anything, collaborate with teams spread around the world, easily push the code to testing and QA, and then to production, where the apps will be automatically monitored and managed.

Although admittedly realizing this vision in full is several years away, we are already seeing many of the components emerging and gaining traction.

Here are some examples:

Development

Almost every area of the development phase is now supported by cloud services. Software-as-a-Service code repositories, version control and bug tracking services such as GitHub, Beanstalk (Subversion-as-a-service) and others are now commonly used in organizations large and small.

IDEs are another story. Until recently, IDEs were last bastion of local development work, but that seems to be changing (at least there are some early indications of it). A couple of example are the Mozilla Lab's Bespin project and HerokuGarden (which although it is no longer supported by Heroku, has a following and is featured in books such as O'Reilly's Learning Rails).

Another trend in IDEs are hybrids, which introduce the notion of developing on the local machine but deploying to the cloud from within the development environment, such as the g-Eclipse project and Aptana Cloud Connect.

A new tool that was recently released and caught my attention is Mike - a service for adding and managing builds in Java for continuous integration.

Testing and QA

This is a particularly active area in the cloud, and for good reason: testing seems to be one of the earliest applications for cloud computing. Some interesting companies in this space include Sauce Labs' Sauce On-Demand, which provides functional web testing in the cloud and is based on the popular open source framework Selenium, and Skytap which provides a full-featured "QA Lab".

Mercury (now part of HP), the 800 lbs. gorilla in testing also has quite a few SaaS offerings, which are increasingly gaining traction. And IBM has launched a development and testing cloud service, which allows using various Rational products in its cloud on a pay-per-use basis.

As a "bursty" workload, and with the growing trends of continuous integration and agile development, it's not surprising that cloud testing is doing well. Developers can run massive tests on-demand and in parallel, saving significant time and shortening the development cycle.

Deployment

Then, of course, there is deployment to production. This is where PaaS players such as Google AppEngine, Force.com, Stax, Heroku, Engine Yard and others come in. All of them significantly reduce the deployment of the app by pre-building and pre-configuring a stack of application infrastructure (data tier, middleware and so on).

Production

In production, applications need to be monitored and managed. New Relic is an application performance management service running entirely in the cloud, and it can serve both applications that run in a cloud environment such as Engine Yard or AWS, as well as applications deployed in the data center. Originally, the company supported only Rails apps, but has now expanded its product to support Java as well.

RightScale is another cloud-based service that allows for a variety of management and monitoring capabilities (and in fact integrates New Relic into it).

The Future of App Development

Last week I received a call from a friend at one of the largest vendors in the technology industry. He told me they were trying to figure out the "future of application development" and asked to meet the team so they could "pick my brain". Whoa, big topic.

I spoke about a number of areas and the topic of this blog was one of them. Although this is merely a story about "tools", there is a bigger picture here. After all, in the eyes of many, the number one benefit of cloud computing is increased business agility. And a key part of business is application development.

If we take all this to its logical conclusion, we can envision a web-based environment (i.e., cloud) which developers go to and can -- with a click of a button -- streamline the entire development process on-demand, accessing the myriad of tools that today require installation and configuration on local hardware.

If you are a developer and use any of these tools, or would like to mention other tools, or have any other thoughts about the experience of development in the cloud, please leave a comment.

The Purpose-Driven Cloud: Part 1 - Usability

As I explained in the previous post The Purpose-Driven Cloud: Introduction, this is the first in a series of blog posts on the different cloud platform offerings available today and how they focus on different dimensions to serve different purposes. This post discusses --

The Usability-Driven Cloud

Usability-driven clouds are a concept similar to the idea of programming language generations. Lower-level generations give the developer complete access to the computing infrastructure, but are extremely complex as the developer is required to build every aspect of the application from scratch. Higher-level generations are much easier and intuitive to use by humans, and come built-in with many common tasks and functions. But this usability comes with a price: the developer cannot access the underlying resources, or "plumbing", at a fine-grained level.

In programming languages, 1GL (1st generation language) would be machine language, 2GL is Assembler, 3GL are high-level languages such as C and Java, 4GL are mostly niche programming languages designed for specific business purposes (such as scientific analysis) and 5GL are visual programming tools (think "drag & drop"), which in their original vision were intended to allow non-programmers create software applications. For the most part, 4GL and 5GL never became mainstream (although the corpses of many attempts lay on the wayside of Silicon Valley roads).

We're seeing similar "usability generations" evolve in cloud computing. However, they come in two main flavors: deployment usability and programming usability.

Deployment Usability -- Platforms of higher deployment usability generations focus on easing and abstracting the process of deploying and configuring the application, not necessarily on writing the code for it. In modern development, this is as big an aspect of application development, if not bigger, than actual programming. See James Lindenbaum's Why Instant Deployment Matters for more on this topic on the Heroku blog.

At the moment, all of the IaaS players can be generally categorized as lower generation deployment platforms. This includes Amazon EC2, Rackspace, Terremark, GoGrid, etc.

PaaS offerings such as Heroku are a higher level generation deployment platform and eliminate the vast majority of infrastructure setup and configuration required to get an app running (hence James's use of the term "instant deployment").

I further discuss Heroku's role as an application platform in Ruby Developers: The Cloud Generation.

Programming Usability -- This dimension is similar to classic programming language generations. So while Heroku is high-level in terms of deployment, it is relatively low level (in modern day terminology) in terms of programming. You have to develop your apps in straight Ruby (which in classic terms would be a 3GL). This is the same generation programming language you would use on an AWS or Rackspace (on either of which you can use pretty much any 3GL language - e.g., Java and C++ - but more on that later).

But although 4GL and 5GL languages failed to become mainstream, we are seeing a revival of them in the cloud. A few examples of such platforms, which generally enable non-programmers to develop apps, include Intuit's Quickbase, WorkXpress (who in a conversation with me explicitly called themselves 5GL PaaS) and even Salesforce.com.

Note that I am not referring here to the Salesforce.com CRM SaaS application, which is a packaged app; nor am I referring to the company Salesforce.com Inc.'s PaaS offering Force.com (which is a high-level deployment platform but low-level programming platform). I am referring to the fact that a business user can quite easily create a custom app using Salesforce.com by creating new objects, fields, tabs, workflows, etc. without any programming skills.

Another thing to keep in mind is that high-level programming clouds will invariably be high-level deployment clouds, as they appeal to non-programmers.

Finally, it's important to emphasize that a higher generation platform in either usability dimension -- programming or deployment -- is not necessarily better or worse than a lower generation platform. It depends on what you are trying to achieve and the skills and resources available.

If the purpose is to develop a unique app that requires a high degree of optimization, a lower generation platform is better. If the task at hand involves building an app that uses typical services and functionality, and a general-purpose infrastructure will serve it well, then a high-generation platform is in order. It's a trade-off.

In the next installment in the series I'll be discussing The Framework-Specific Cloud.

Stay tuned.

The Purpose-Driven Cloud: Introduction

Nearly a year ago I posted Thoughts on Platform-as-a-Service, in which I reviewed the state of cloud platforms at the time. A lot has happened since then, and it's time to revisit the latest and greatest in PaaS and specialized cloud platforms.

I've been asked several times by companies I advise or just talk to, as well as by journalists, how should companies select a cloud provider? The answer is, as it almost always is, "it depends." Similarly to what we had already seen in programming languages and traditional application platforms (i.e., installed on-premise), different platforms have been designed to serve different purposes.

I am planning on publishing a series of posts with the general title of "The Purpose-Driven Cloud", which cover the different dimensions that differentiate cloud platforms and make them more suitable for different purposes.

The dimensions I am going to cover are:

• Usability-Driven Clouds [UPDATE: Post is live here]
• Framework-Based Clouds [UPDATE: Post is live here]
• Domain-Specific Clouds [UPDATE: Post is live here]
• Data-Driven Clouds
• Industry-Focused Clouds
• Geographically-Centric Clouds

Simultaneous to this intro, I am publishing the first in the series: The Usability-Driven Cloud.

The Cloud Computing Show with Gary Orenstein

Last week I joined Gary Orenstein, host of the The Cloud Computing Show podcast, and Jeff Lawson, co-founder and CEO of Twilio for a podcast recording of Gary's show. It's worth a listen (if I do say so myself). We discuss some of the latest news around cloud computing (OSCON, Rackspace API, Microsoft Azure pricing and more) and of course talk about Twilio, which I have written about in the past as What's Really Exciting About Cloud Computing.

At the end of each show, Gary does this thing where he asks eah of his guests to recommend a cloud service they like, and he contributes one as well.

Here's what we each recommended (I cheated and recommended two):

• Gary: http://bit.ly/ (URL shortening and tracking)
• Jeff: Get Achievements http://www.getachievements.com/ (instant recognition programs)
• Geva:New Relic http://www.newrelic.com/ (performance monitoring) and Good Data http://www.gooddata.com/

(easy analytics)
Listen to the podcast here.

Yahoo-Xoopit Acquisition: A Missed Opportunity?

Earlier today I published a blog post on GigaOm about the Yahoo-Xoopit acquisition and what I think is an overlooked aspect of the deal, especially as it related to Xoopit's CloudQuery service. Check it out: Will Yahoo Use Xoopit's CloudQuery to Help Usher in the Real-Time Web?

Ruby Developers: The Cloud Generation

In Evans Data Corp.'s  first 2009 North American Development Trends Report, Joe McKendrick reports that Ruby usage has increased 40% during the past year. Darryl Taft of eWeek writes about the report:

According to Evans Data's biannual North American Development Survey, 14 percent of North American developers use Ruby some part of the time, up from 10 percent in 2008.

Moreover, the survey showed that 20 percent of developers expect to use Ruby in the coming year.

This trend is somewhat corroborated by the Framework Web Trends report from Built With.

To cloud computing there is a special significance in the increased adoption of Ruby, because Ruby developers are the cloud generation.

Back in early May I attended Oreilly Media's RailsConf 2009, the largest annual event for the Ruby-on-Rails community. It was an enlightening experience for me as for the past 10 years or so I had been deeply involved in the enterprise Java world.

For those of you unfamiliar with the story of Ruby, it is a dynamic programming language that has been around for more than 15 years but became "hot" circa 2006, particularly among the Web 2.0 crowd. It really took off when David Heinemeier Hansson developed the Rails web application framework as part of his work on 37Signal's Basecamp software-as-a-Service in 2005. It became especially famous by the fact that companies such as Twitter were using it and Ruby enjoyed an adoption explosion in 2006-07.

So essentially RoR is a programming language that is only now coming of age. And what struck me at Railsconf was that as a community they are taking cloud computing as a given. This is how you deploy apps. Period.

Before I explain further, an analogy I use for this is the telephone infrastructure in under-developed countries. Many countries in Africa and regions of China, for example, jumped straight to cell phone infrastructure. They simply skipped landlines for the most part.

In a similar fashion, the Ruby community is essentially skipping traditionally on-premise installed software. The dominant model for RoR application deployment is cloud, with platforms such as Slicehost (now part of Rackspace Cloud), Engine Yard and Heroku. Cloud services such as New Relic, FiveRuns and Scout provide the de facto standard monitoring and management frameworks, and cloud-based GitHub is the standard code version and developer collaboration tool for the RoR generation.

Moreover, training courses and educational books, such as Oreilly's Learning Rails , use cloud platform Heroku as their standard learning environment. Meaning that a new generation of developers, for whom Ruby is their first or early programming language, are growing up with cloud platforms as a natural part of life, just as my kids are growing up with Google Docs, Wikipedia and smartphones as a natural part of life. Imagine that.

What's also interesting about Ruby-land is that unlike Java, a programming language that made its big entrance a little over a decade ago, there are no dominant software vendors for Ruby infrastructure/framework/middleware/platform space. Instead -- and this is perhaps another area in which Ruby skipped a generation -- all of the application software components are pure open source plays, including Ruby and Rails themselves (and also including a long list of components such as Sinatra, Rack, Mongrel and Thin). 

And the same goes for the various Virtual Machine implementations of Ruby, such as MRI (the original), JRuby (a JVM-based implementation) and IronRuby (an implementation for the Microsoft .Net Framework).

If you had gone to a Java conference in 1997, the vendors dominating the show would have been WebLogic and NetDynamics (and Sun, of course) -- the three leading app servers. At the 1999 JavaOne show, they would have been the vendors that acquired them - BEA and Sun.

In the 2009 RailsConf, the two dominant vendors were Heroku and Engine Yard. Unlike some perceive these companies, they are not merely Rails hosting services -- they are the application platforms for Ruby, and they are on the cloud.

Heroku has demonstrated a particularly deep understanding of this role. They have "curated" a complete tightly integrated platform out of the various components and deliver an extremely easy to use platform that takes care of all things infrastructure (scalability, reliability, configuration, database connections, etc.) and lets the developers focus on their unique logic -- not the plumbing. They are, in essence, the WebLogic of the cloud generation.

Full disclosure: I am advising Heroku on strategy and marketing.

Innovator's Dilemma and the Cloud

In his seminal book The Innovator's Dilemma Clayton Christensen lays out the dynamics that allow start-ups to succeed. In short (and without doing justice to the depth of Prof. Christensen's ideas), the idea is that technological innovations initially represent too small of a market for large, established companies, which need to continue demonstrating a significant growth in percentages relative to their current revenues.

This, of course, creates an opportunities for new entrants, who often start with zero or very little revenues and therefore the emerging market represents a significant opportunity to demonstrate growth. One of the interesting concepts in Christensen's book -- and his later works that further develop the concept: The Innovator's Solution and Seeing What's Next -- is that in many cases the large incumbent vendors are well aware of what the technological future holds, but are unable to act appropriately because the dynamics of the business.

Cloud computing is now in that classic stage -- and the symptoms are everywhere. There seems to be little doubt in most observers' minds that cloud computing is a revolution and represents the future of IT, but turning this realization into a profitable business -- for both start-ups and established vendors -- is a different proposition altogether.

Low Visibility

One of the problems is that there is so little visibility as to the actual rate of cloud adoption. The hype is undeniable, but how significant are the revenues, and more importantly, how fast are they growing? Amazon, whose cloud services are perhaps the most significant indicators of cloud adoption, is intentionally -- and quite effectively -- hiding the finances behind AWS. The same goes for Google App Engine, Microsoft Azure and other cloud operations within larger vendors. And there's little to be learned from leading start-ups such as RightScale, who are of course privately held and keep their cards close to the vest.

One interesting case is Rackspace, the only company in the space that I know of that actually discloses its revenues from cloud operations separately. For example, in its Q1 2009 financials, Rackspace reported revenues of $134 million from its traditional managed hosting business and about $11 million from its cloud business. This comes out to a 16.5% growth rate from Q1 2008 for the managed hosting business compared to 145% growth for the cloud business (and note that part of the cloud business growth was due to the acquisitions of Slicehost and JungleDisk).

We can see The Innovator's Dilemma in numbers. While cloud is clearly rapidly growing for Rackspace, the absolute numbers are still small, and the company faces a dilemma of what part of the business to invest in.

And we can see this dilemma with other large vendors. In a recent interview with TechTarget, Mike Repass, product manager for Google App Engine said:

...rather than one big enterprise poster child, we'd rather have a hundred small web poster children, the kid in Brazil or China that wants to build apps on the web. It's very hard to build the pipeline to extract money from the big guys.

And we all know that in the long run, the real money is the enterprise, not the hundred kids in Brazil and China, and even Santa Clara County.

But then again, the future of IT is in the cloud. So what's a company to do?

Different Perspectives

Depending on the size and business of the organization we can see different approaches to the dilemma.

Established Vendors

The largest of vendors, such as Amazon, Google and Microsoft, have sufficient resources to invest strongly in cloud computing without compromising in any way their existing high revenue and profitability businesses targeting consumers and enterprises. Oracle is a different animal because of Ellison's declared disdain for cloud computing. But now many believe that Oracle's play in the cloud will be mostly through its recent acquisition of Sun Microsystems, which has been investing heavily in the cloud.

IBM and HP also both seem to be making noises in the cloud, the former more significantly than the latter. But much of their marketing and investment seems to be in a way that somehow tries to mitigate the Innovator's Dilemma, also known as internal and hybrid clouds.

But as we go down the food chain, we see that different vendors are responding differently. Yahoo has been mostly silent about its cloud strategy, despite some rumors and public job postings, which indicate that they are seriously considering it.

Today, I'm speaking at an event by Tibco about their new cloud offering, Tibco Silver. Tibco is introducing many of its existing middleware products as a hosted cloud service (btw, you can follow the event in real time on Twitter with the hashtag #NOWCloud).

But for many of the mid- to small-sized vendors strategies are all over the map and mostly amount to marketing. At most, they may have created AMIs, and some even back that up with pay-per-use pricing (such as RedHat/JBoss). Others such as SpringSource have remained fairly silent about cloud (although I hear insider rumors that there is something in the works).

For many of these vendors the solution seems to amount to trying to take advantage of the cloud buzz through symbolic marketing-oriented efforts, without having to make significant investments in a true cloud offering, and without disrupting existing business models.

Start-Ups

Theoretically, start-ups shouldn't have a dilemma. They should be going all out for the cloud with the hopes of either unseating existing vendors, or gaining enough traction quickly enough so that the large vendors will acquire them down the road. But in practice, things aren't that simple.

Some start-ups are pure-play cloud companies. In other words, the whole point about them is that they provide cloud offerings. For them it's of course a no-brainer. Examples of such companies include Twilio, Heroku and Rightscale.

But I am also talking to software start-ups that are having serious dilemmas about the cloud. Think of an application management software start-up that is ready to realease a next-generation product in the space, or think of Reductive Labs and OpsCode, the commercial efforts behind Puppet and Chef respectively. Clearly most of the business today is in traditional data centers -- but the future is in the cloud.

Transitions Are Hard

Now some have suggested that these companies should start selling to the traditional enterprise with the classic approach, and gradually make the transition to the cloud when the market is bigger. The problem is that such an approach is easier said then done. Several factors make it extremely difficult to make such a successful transition. Even if in some of these cases the actual products would require little investment to transition to a cloud-centric approach, these companies will have to battle market perceptions, company culture, customer concerns and re-forming the company's ecosystem of partners and channels. I will post a more detailed blog on this topic soon.

Bottom Line

At the end of the day, both large and small companies will have to make a gut feeling call. The considerations include what they believe the adoption lifecycle timeline of cloud is for their particular business and how much they have to lose (some companies' existing business is failing, so there's little risk in making s strategic transition -- but that's a very hard psychological pill to swallow). They also include company culture and ecosystem, and of course the level of ivestment required in the product. In some cases, the solution may be aquiring, merging or being acquired.

I'll discuss some of the topics raised in this blog in more detail in future posts.

Podcast: Cloud Computing and Open Source

On Friday, James Urquhart and I recorded another episode of our podcast, Overcast, with Matt Asay on the topic of the relationship between cloud computing and open source. To me it was  fascinating topic to discuss.

Matt is VP Business Development at open source CMS company Alfresco and authors the blog The Open Road on CNET.

It was a fascinating conversation. As cloud computing emerges there are many lessons to be learned from the open source movement. I also completely agree with Matt that perhaps finally cloud computing offers a way for many open source companies to monetize their technology.

You can listen to it here.

Hubs, Spokes and Islands in the Cloud

Many of the cloud start-ups I've been working and talking to during the past few months are facing some of the same go-to-market challenges. Larger companies are also facing these issues (see podcast with Intuit, for example). My intent is to write a series of posts discussing these issues and some of the considerations around them.

This first post in the series has to do with the cloud offering's role in its ecosystem. Before I jump into it, I acknowledge the fact that there is a very large body of work about this topic. Please see my footnote on this.

We can think about as the hub-spoke-island dilemma: cloud providers (IaaS, PaaS, SaaS) and cloud services need to make a strategic decision about their role within the ecosystem.

Some are the sun of their solar system (hub) and others play the role of the planets (spoke). But things can get a bit more complex than that and the decision on what role to play is not trivial.

The Hub

What characterizes a hub is that an entire ecosystem of products and services evolves around it. In addition, the hub typically "owns" the customer relationship. Some examples of cloud-related hubs are:

Amazon EC2 - A plethora of ancillary services and tools have been created to support Amazon's compute infrastructure-as-a-service. Examples of these satellite services include RightScale's EC2 management and deployment offerings and Hyperic's EC2 monitoring support. In addition, many vendors -- including IBM and Red Hat -- have made their software products available within the Amazon ecosystem, including pay-per-use hourly pricing (billed by Amazon) and packaged Amazon Machine Images (AMIs).

Another example is Salesforce.com/Force.com, with its AppExchange. AppExchange allows third-party providers to offer various applications that extend and enhance Salesforce.com's core CRM capabilities -- and many have.

Spokes

Spoke services are ones that complement and enhance a hub, but are not viewed as the central service in the eyes of the customer. In fact, spoke cloud services often have no value unless they are working in the context of a hub service.

There are many examples of spokes.The popular VerticalResponse email campaign service is a classic example. It has zero value without access to a customer database, and so it is most often used as an extension to a CRM application such as Salesforce.com. I have already mentioned RightScale and Hyperic, both of which make classic spokes. And there are many others, just check out Salesforce's AppExchange or Intuit's Marketplace.

Should Everyone Strive to be a Hub?

The answer is simply no. While the hub has the great advantage of owning the core relationship with the customer, one can only be a hub after having that customer base. And to attract many satellite services, it has to be large customer base, something that takes both time and money. Many spoke services don't have a large enough addressable market, or the wherewithal to make that investment worthwhile. Attaching yourself to an existing large customer base can be a very lucrative strategy.

Take for example TopTier, the company that made Shai Agassi rich and famous when it was acquired by SAP for $400 million in 2001. Agassi chose a "ride the elephant" strategy, developing a portal product for existing SAP application users. In a sense, become the spoke for a single large hub is a risky strategy. In fact, many companies have tried and failed in this strategy when they built apps for Microsoft Windows' hub or for other platforms. The risk is of course that the hub vendor itself will get into the business that the smaller company is in (instead of opting to acquire it as in the case of TopTier).

In the cloud, we saw this risk materialize for RightScale last year when Amazon announced it is releasing (or planning to release) several services that RightScale had provided as a value-add to Amazon, such as a web management console and auto-scaling.

Spoke to Many Hubs

Continuing with the RightScale story, the company realized they cannot be entirely dependent on Amazon as their sole hub, so they quickly introduced support for additional cloud providers, such as GoGrid and Flexiscale. In fact, many of the other spokes I have given here as an example, are in fact spokes to many hubs, like electrons shared by atoms in a covalent bond.

The "spoke to several hubs" approach has the advantage of both access to a much larger install base as well as significant reduction of the dependency on a single hub. It is almost an eventuality that any company with a spoke strategy will end up with.

Snowflake Patterns: Hub-Spoke-Hub-Spoke

Being a hub *and* a spoke is not mutually exclusive. CohesiveFT's Elastic Server is a good example for this. Elastic Server is a spoke to many cloud and virtualization platforms such as Amazon EC2, VMware and Parallels. But in turn it is also a hub for the many stack components that it supports - including many free open source and commercial software.

Don't Confuse Spokes with Customers

Not every service that is built on Amazon EC2, for example, is a spoke to it. Many services are simply customers of EC2 and so shouldn't be confused with being spokes, because as far as the customer is concerned it is not part of the hub's ecosystem.

A good example of this is Heroku, a Ruby platform-as-a-service. It is a cloud that allows Ruby developers to instantly deploy their applications. Users can easily fire up additional instances of the application to scale it. Heroku is built entirely on EC2 but that fact is transparent to the user. Heroku is taking advantage of the EC2 platform but does not play a role in its ecosystem. It does not benefit from EC2's install base, nor does it add value to direct EC2 users.

The Island of Doom

Perhaps the worse scenario is to be a completely independent island in the ecosystem. Neither a hub to many spokes, nor a spoke to one or many hubs. Very few companies other than Micorosoft, Google and a handful other mega-vendors can afford to quickly build both the product depth and breadth as well as the customer base to survive and thrive in this environment -- and even those large vendors are increasingly relying on the ecosystem.

The classic Silicon Valley island story is of course the early years of the Macintosh versus DOS/Windows. Apple famously insisted on tightly-coupling its hardware, OS and applications and all but shut out others from being able to develop to the platform. Microsoft, on the other hand (and this may sound strange to the younger folks reading this), took a more liberal approach and allowed others to develop apps to its DOS and later Windows operating systems. This allowed its operating system to have a much wider offering in terms of apps. Of course, eventually Microsoft crushed many of its own ecosystem partners by offering a competing application. Wordperfect anyone?

Building a Successful Hub

The key to becoming a successful hub -- besides having a great product/service and effective marketing -- is rapidly create an ecosystem around the service in question. This helps even small companies quickly offer a "whole product" because partners (spokes) develop complementary services the company cannot build itself fast enough.

Obviously, a hub with a large and growing customer base will attract many partners, but that's not enough. There are many ways to encourage additional spokes to support the hub, including:

• Open Platform/Open Source
• Open/Public APIs
• Offering a Software Development Kit (SDK) and other supporting tools that make developing for the platform easier
• Supporting standards which enable quickly integrating existing supporting products (such as Eucalyptus is doing with the Amazon API)
• Incentives and profit-sharing
• Helping partners monetize their solutions by providing marketing services and billing support
• Allowing easy self-service and support to partners

Note: as mentioned above, the topic discussed in this blog has been a core issue in the technology industry in general and specifically the software industry for decades. Much has been written and discussed about it, often with the terminology of platform versus application. Over the years experts have called it Value Networks (Clayton Christensen ), Value Constellation (Norman & Ramirez), Value Chain (Michael Porter">Michael Porter) and Whole Product (Geoffrey Moore ). This blog was a humble attempt to put this topic in the context of recent developments in cloud computing.