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“And now,” cried Max, “let the wild rumpus start!”

Two REALLY important things happened this past week:

1. Microsoft unveiled its utility computing platform (Ray Ozzie's plans for it, at least) and it looks a lot like Amazon Web Services. Both offer not just hardware-as-a-service, but (as Simon Wardley puts it) frameworks-as-a-service.

Ozzie says Microsoft will provide "a fabric upon which online services run. Application frameworks that support a variety of app models designed for horizontal scaling. Infrastructure that manages performance optimization." And Alex Iskold calls S3, EC2 and SQS the foundation of Amazon's Web OS, which "hides complexity behind simple APIs; turns the concepts of search, storage, lookup and management of data into web services."

Bill Boebel made me realize why FaaS > HaaS. He said he's always looking to get more done faster (who isn't??). Last year he built a backup system atop S3: "We coded the storage client, not the storage server. Initially we had planned on building both. But when S3 came out our thoughts quickly shifted to 'Screw that, lets just build the client and get this thing released'." In this case he was able to leverage Amazon's Web OS. In other cases he's hired people to build stuff from scratch - but how often would he (or anyone else) choose to if it weren't necessary?

Amazon gets it. Microsoft too. I'm not sure infrastructure vendors who sell HaaS without FaaS will be able to compete. As for those who offer standalone servers (with non-interoperable storage media and device drivers!!) as units of computing capacity? All I can say is, yikes.

2. Amazon announced the ability for EC2 users to buy/sell machine images from one another. Amazon's base price is $0.10 per instance/hour. If you listed a $0.12/hour virtual appliance on Amazon's marketplace, its billing system will automatically give you a $0.02/hour credit any time the appliance is deployed.

The interesting thing about this "reseller 2.0" arrangement is, virtual appliance publishers will help EC2 reach a broader audience without reducing Amazon's profit margin. Or promising end users any more bandwidth/storage capacity than are actually available. Or hiding behind traditional reseller hosting smoke and mirrors. Instead, each will add real AND unique value to the customer experience. As Rurik Bradbury from Intermedia.NET puts it, being a traditional hosting reseller is like having fish, but the new era we're entering will require fishing skills.

The world is changing - and it's about time! Last week Takeshi Eto (now of DiscountASP.NET) and I were reminiscing about his HostSave days. Back in 1999, HostSave's $6.95 web hosting plan included 1GB of data transfer. Today, many sub-$10 hosting plans advertise 3000x more bandwidth - which EVERY provider acknowledges they can't really deliver! In the brave new Internet infrastructure world, it'll take more than empty promises to be the King of the Wild Things. And unlike Maurice Sendak's Max, we won't find supper waiting back where we came from.

July 31, 2007 at 03:30 PM in Beyond the Box | | Comments (0) | TrackBack (0)

Jason is kinda tall

Edward Gaa from Globat took a photo of Jason Silverglate and me at the W in Chicago. I can't believe we've known each other for 10 years.

Jay is founder/CEO of FortressITX/DedicatedNow and such a rock star! He, Nick Blozan from 3Tera and I did a "how to sell hosting" panel at the very, very end of HostingCon. I thought it'd just be the three of us hanging out in an empty room, but a whole bunch of cool people came, including Jeff Hinkle from GNAX - whom I lost all kinds of business to while working at EV1Servers. He should have been speaking!

Another old friend I ran into (thanks to Demand Media!!) was Steve Heflin from Afilias. His previous company, Domain Bank, sponsored my Web Hosting Magazine pre-launch party at Fall ISPCON, 1999. Thanks, Steve, for being a part of that wild dotcom adventure...

July 31, 2007 at 10:11 AM in Conferences | | Comments (1) | TrackBack (0)

links for 2007-07-31

July 31, 2007 at 01:27 AM | | Comments (0) | TrackBack (0)

links for 2007-07-30

July 30, 2007 at 01:25 AM | | Comments (0) | TrackBack (0)

Let us go and make our visit

My 10th grade English teacher made the whole class memorize The Love Song of J. Alfred Prufrock, a T.S. Eliott poem about... the relationship between web hosting providers and SaaS. No, really.

Do I dare
Disturb the universe?

So Prufrock is a lonely guy who is intrigued by romance but hesitates to make a move. He ponders over "a hundred visions and revisions" but ultimately concludes "No! I am not Prince Hamlet, nor was meant to be..."

Web hosting companies, likewise, are fascinated with SaaS. As 1&1 CEO Andreas Gauger tells eWeek: "web hosting is becoming more and more of a commodity play... In three or four years, SaaS will overtake the revenue we get from hosting." But in the meantime, 1&1's website calls bandwidth and web space the "core features" of its service.

After all, bandwidth/web space are traditional web hosting providers' bread and butter. At a time when the commodity hosting business seems to be humming along, is it really worth it to reach beyond the industry's shared/VPS/dedicated comfort zone?

Is it perfume from a dress
That makes me so digress?

And yet... Who can resist the allure of analysts' optimistic projections? Or Salesforce.com's $4.72 billion market cap? That's 7.27x annualized revenue compared with Web.com's 2.06x or Savvis' 2.50x. (Poor Savvis. Its valuation fell by 25% in July!) The Planet, for one, seems to be paying attention. Have you seen how "SaaS Hosting" is at the top of its Managed Hosting service catalog, four spots above "Website Hosting"?

Still, my Texan friends don't seem any better equipped to engage with SaaS developers than Prufrock is to pick up girls. The Planet's view of "SaaS business challenges" encompasses only infrastructure issues - which is only a small subset of what's on a SaaS CTO's mind. For instance, check out Bill Boebel's blog post on why Webmail.us moved its storage from Rackspace to S3. Amazon has web services he could leverage to build stuff faster!

Why can't traditional web hosting providers understand that time is sooo often more important to customers than money??

I have heard the mermaids singing, each to each.
I do not think that they will sing to me.

Speaking of Amazon, I've been told time and again that S3 and EC2 are "not web hosting". Same goes for Office Live. Or Google Apps. Or MySpace. Or Flickr. Or Salesforce.com. Or Demand Media's ChannelMe.tv. Not. Web. Hosting.

But do end users care? Do developers? 265,000+ people have signed to to build stuff on Amazon's platform. 7,000+ attended Salesforce's developer conference last year. Besides, didn't Andreas - CEO of the largest hosting company in the world - say that SaaS will overtake commodity hosting within 3-4 years?

Oh, do not ask, “What is it?”
Let us go and make our visit.

If you work for a company that's in the commodity hosting business, you could weigh SaaS risks and opportunities in Prufrock-like isolation - or come to San Francisco on September 5-7!

At last year's Office 2.0 Conference, I got to talk to hundreds of SaaS developers about their infrastructure *and* business challenges. Your product manager should have been there. And he ought to be there this year. He (and every other attendee) will get an iPhone, which might help him meet girls, even as he figures out how to lure in more SaaS customers. What could be better?

PS - Early bird registration ends on July 31; the ticket price will go up by $500 starting Wednesday. Office 2.0 is produced by Ismael Ghalimi, who is the CEO of Intalio and keeper of the Office 2.0 Database. Check out the list of SaaS providers, end users and VC investors who have already signed up. See you there! :)

July 29, 2007 at 04:03 PM in Conferences, Perils of Commodity Hosting, SaaS | | Comments (3) | TrackBack (3)

links for 2007-07-29

July 29, 2007 at 01:22 AM | | Comments (0) | TrackBack (0)

Can hosting partners make any contribution to the Microsoft cloud?

I was telling Suren Singh (who is a Hosting Solutions Manager at Microsoft) that I'm not sure it'd be wise for a web hosting provider to consider MSFT its partner. Microsoft is investing zillions on its data centers, in which server count has doubled over the past year. It's already hosting Exchange and SharePoint for Energizer and plans to sell hosted services to others "vigorously and transparently". The reassurances it gave at its partner conference earlier this month were fuzzy at best...

In retrospect, my objection was poorly phrased. What I should have said was, I'm not sure how much sense it makes for Microsoft to have a hosting partner program.

The day before yesterday, Ray Ozzie outlined the three layers of Microsoft's software + services platform in his presentation to Wall Street analysts. These include:

1. Global Foundation Services: huge data centers in which "reliability is achieved through redundancy, not the fail-safe nature of any given component"

2. Cloud Infrastructure Services (which Nicholas Carr calls the Cloud OS): virtualized utility computing fabric with application framework that supports horizontal scaling and manages load balancing/performance optimization

3. Live Platform Services: data and features - such as identity management, contact lists, user presence and advertising - that are shared across multiple Microsoft and 3rd party apps

Now, in which of these layers can a commodity hoster make ANY contribution?

Ozzie went on to describe Microsoft's target audiences. Individuals, he said, will enjoy connected entertainment and productivity. Companies will be able to move their IT infrastructure into the cloud at the "lowest, lowest possible cost". And developers will have limitless access to computing and storage capacity at "very, very low cost".

(Quote from CNET: "Microsoft is trying to make sure that its business terms are attractive enough to woo the next MySpace or YouTube to bet on its technology. It has spent months talking to existing partners, but also to venture capital firms and start-ups. For now, Microsoft is offering up many of its services free for up to 1 million users, while saying it wants to strike some kind of deal if a service exceeds that threshold.")

Let's think - can traditional shared/VPS/dedicated hosting providers help deliver any of these benefits, considering their track record of fostering NO connections between customers and stranding user data on non-redundant, stand-alone servers?

Ozzie did acknowledge that some companies will want to maintain on-premise servers ("the ultimate in customization and control") and others will work with partners to “take advantage of unique vertical expertise or vertical solutions”. Unfortunately, I don't think such expertise/solutions are available from 99% of the folks Suren met at HostingCon.

Ozzie's vision reminded me a lot of Amazon Web Services, for which its evangelists have built a vibrant developer ecosystem. Why, in contrast, would Microsoft want to sign up hosting partners who are not at all equipped to advance its cause?

PS - Duncan Strong from Melbourne IT made a more compelling case for Microsoft's hosting partners program than any Microsoft employee I've met. He said since MSFT product managers have P&L responsibility, they generally gear development efforts toward distribution channels that deliver the highest ROI. Up until now, the hosting channel has done better than Xbox Live, let's say. But... software + services is sooo much farther from traditional hosters' core competency than Windows Server SPLA licenses.

July 28, 2007 at 05:57 PM in Beyond the Box, Perils of Commodity Hosting, SaaS | | Comments (2) | TrackBack (1)

Bigger than SaaS

IDC thinks the global SaaS market will be worth $19.3 billion by 2011, but BusinessWeek says the US pet products market passed the $20 billion mark well before George Bush took office. This year Americans will spend $41 billion on their pets ("more than the GDPs of all but 64 countries in the world"). Annual spending is expected to hit $52 billion by 2009.

Over 71 million American households own pets, while just 60 million have broadband Internet access. PetSmart's services business will generate $450 million in 2007 revenue, which is less than Salesforce.com's $497 million last fiscal year, but a lot more than RightNow Technologies' $110 million. Stats like these kind of put things in perspective...

July 27, 2007 at 11:54 PM in SaaS | | Comments (0) | TrackBack (0)

GoDaddy vs Facebook

15 months ago, I wrote a post comparing GoDaddy's $250 million valuation (according to MarketWatch) relative to Facebook's $550 million. MarketWatch said social networks could be great environments for conducting business in. At the time, I didn't think Facebook delivered on this promise, and I suggested GoDaddy could step up to the plate:

"I'm envisioning a Linkedin-like service where GoDaddy's many million customers could create business profiles which might include photos/descriptions of products/services, links to investors/vendors/partners, memberships in industry associations and networking groups..."

I exchanged a couple of emails with GoDaddy VP Technology Mike Chadwick, who ultimately shrugged off the idea.

Since then, Facebook has evolved first towards - then far beyond - Linkedin. Although GoDaddy has grown by leaps and bounds, its business model remains unchanged. Which is why Facebook director Peter Thiel gets to call $3 billion a "low ball offer" for his $7-10 billion company, while GoDaddy's Bob Parsons doesn't. Just think: where would Facebook be today if it squandered its resources on Superbowl advertising instead of innovating??

Also since then, Demand Media has become GoDaddy's closest competitor. Led by former MySpace chairman Richard Rosenblatt, the company is currently the second largest domain registration provider. During his HostingCon keynote, Richard hinted that the social networking tools behind ChannelMe.tv aren't just for the consumer market. As of late 2006, Demand Media already had a $580 million valuation...

Doesn't it seem like GoDaddy should reconsider the value of social media? I really, truly think the most important benefit that GoDaddy (as well as 1&1, Hostway, Endurance International and its other traditional web hosting/domain registration competitors) fails to deliver is facilitating connections among its customers.

July 27, 2007 at 04:56 PM in Social Networking, The Domain Name Game | | Comments (1) | TrackBack (0)

Reverse delegation

Jess and Jeff (who are two of my most insightful friends) came to the same realization at HostingCon: most people they met "operate a company", while very few "run a business".

Jess explains that operating a company means jumping in the trenches and rolling up one's sleeves. Lots of multi-talented web hosting company founders, for instance, get personally involved with closing sales, configuring servers, writing code, answering support calls...

Running a business, on the other hand, means setting goals, developing procedures and delegating as much as possible to appropriate talent. Jeff points out that just as bureaucracy stifles innovation within large organizations, the reluctance to hand off responsibilities hinders smaller companies from reaching the next level.

An interesting corollary to Jess' and Jeff's discovery is, most folks at the show target do-it-yourself customers (smaller/lower growth?) instead of those who are looking to delegate (higher potential?).

As a point of reference, let's consider 1&1, whose CEO obviously doesn't spend his time in the trenches. Its web hosting service includes a bewildering array of features: in addition to my site creator/form builder/Perl syntax checker, I could install SMF, Brim, Mantis and many other applications I'm not familiar with. If I were a multi-talented customer who's ready to roll up my sleeves, I might even be able to take advantage of the pay per click and CitySearch ad vouchers. 

But... is learning to use my web hosting account the highest and best use of my time and attention? Should web hosting CEOs help me recognize that it isn't - and offer to take on more of my responsibilities even as they hand off tasks on their own plates?

July 27, 2007 at 03:18 PM in Perils of Commodity Hosting | | Comments (4) | TrackBack (0)

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