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Posts Tagged ‘IBM

Vertical integration as a cloud competitive weapon

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The Maxim gun and its successor the Vickers (s...
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When will the cloud providers begin acquiring product companies in order to keep the technology out of the hands of their competition?

Is that a strategy worth pursuing?

Many clouds are using open source technology to power their solutions, but I assume many of them have reliance on commercial products as well.  Could one cloud get an upper hand over the others by bringing a leading edge commercial product in house, integrating it tightly into one’s own cloud, and then end-of-lifeing the commercial version?

If you believe that the winners of the cloud game will be won by those firms with the greatest ability to control and continually shrink OPEX then maybe it is worth for big cloud players to bid against the typical acquirers of typical infrastructure technology (MSFT, Symantec, etc) in order to keep that technology out of the hands of the other clouds.

Are there any commercial products that are so clearly differentiated and powerful that they’d be worth a cloud provider paying up to acquire?

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Written by John Gannon

June 26, 2009 at 4:23 pm

What the cloud is all about

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IBM is fixing the one thing it really needed to get its head around to do well in the cloud- simple pricing models, without needing to call a third party expert to unravel them. Forget technology – the cloud is about simple pricing and billing.

via James Governor’s Monkchips » IBM in the Amazon Cloud: on pricing and billing innovation.

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Written by John Gannon

May 11, 2009 at 2:08 pm

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Cisco’s bold move to own the cloud computing infrastructure

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Image representing Cisco as depicted in CrunchBase
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Cisco is getting into the server business, says NYTimes.com.   One could argue that the writing was on the wall when Cisco announced their Nexus virtual switch platform complete with deep VMware networking integration, but now there are few doubts that Cisco has clear designs on owning a huge portion of the cloud computing market.

It is important to note that Cisco is not going to be getting into the box business (a commodity business with low gross margins).  They are going to leverage their current architecture to build blade systems.  These blades are bound to be highly configurable, customizable, and most importantly more easily managable by enterprise IT staff than existing x86-based servers.  True, the other big server vendors have blade servers, but a Cisco/VMware combo is going to best equipped to deal with the networking nuances (and headaches) that become apparent as you virtualize a datacenter into a smaller physical footprint.

Who wins?

I think the NYTimes.com article is correct to assume that this will spur the server vendors to start playing more aggressively in the networking space.  Blade servers have already encroached on Cisco’s territory as blade enclosures have ethernet switches built in, but I’d expect to see even deeper integrations and more robust feature sets from the server guys going forward.

My guess is that the open source routing startups (like XORP and Vyatta) are well positioned to take advantage of this shift because the server vendors could work with them to build integrated server and networking platforms (at a fraction of Cisco’s price).  I’m also hoping (selfishly, as we have an investment in a datacenter switch company) that this will encourage the server vendors to look more broadly at their layer 1-7 networking strategy and how other players (besides Cisco) will fit in.

Who loses?

Cisco will certainly take a near to medium term margin hit (just as they did when they entered the carrier business).

I also think server vendors without a strong management software offering will feel some pain (Dell comes to mind) as Cisco (and HP and IBM once they respond) will be able to put together some very slick, integrated offerings that will make servers and networks much easier to manage.

What do you think?

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Written by John Gannon

January 21, 2009 at 10:11 am

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