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As the world is moving to online in general and cloud in particular, what is going to happen to the $40 bln hosting industry?

Parallels (which is probably the largest software vendor for hosters) published video recordings from their Parallels Summit 2012, including this keynote fro their founder Serguei Beloussov. At 31:51 mark he talks about the area near and dear to my heart – Platform-as-a-Service (PaaS) and specifically Jelastic in which I work. Check it out and see if you share Serguei’s views on where the industry is going:

Click to watch the recording on YouTube

 

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Is there hard ROI to use a cloud IaaS instead of a server in your garage/basement/on-premise datacenter? I think there increasingly is and justifying self-hosting is getting increasingly tough.

I would actually go as far as posit that you can now get a server in a public datacenter at price comparable to your electricity bill alone!

If you don’t believe me – let’s do a quick math.

Mark Kolich noticed in his blog that the server he had running at his home was consuming 220 W, which at the consumer electricity costs of 12-cents per kWh means:

0.220 kWh * 12 cents = 2.64 cents per hour

Almost 3 cents/hour for electricity alone not taking into account: labor, server hardware amortization, data-storage costs (replacing a failed disk), cooling costs, ISP costs, security costs (routers, firewalls, etc.), power backup costs (a UPS) and so on. Mark notes that he could have probably bought a newer more energy efficient server – but the required investment would not justify the savings.

The shocking part is that the recent price competition of cloud infrastructure (IaaS) and platform (PaaS) vendors took the current cloud servers costs to roughly the same order of costs. Here’s a quick survey of a few major cloud players:

  • Microsoft is rolling out their 5 cent/hour option (with additional further discounts if you pre-pay for reserved use – e.g. say you have a bunch of instances which you have running all the time and you are willing to pre-pay for the next few months).
  • Same thing with Amazon: minimal price (although for a slightly more limited version) is already in 2 cent for Linux / 3 cent for Windows instance area, with reserved/pre-paid option getting as low as 0.7 cents/Linux & 1.3 cents/Windows.
  • Rackspace pricing starts at 1.5 cents/hour for Linux, and 8 cents/hour for Windows.

My take on these numbers is that you need to have a really good reason to go into hosting when there is so much price competition in that space and the margins are going down so fast.

The only good reason I can think of is hosting being your competitive advantage in some way. For example, being a local hosting company in a country which legislation is making it hard to use foreign datacenters. Or offering some level of compliance which public hosters cannot provide. And as a matter of fact both of these differentiators are gradually going away with the vendors quickly getting all the possible certifications and compliance stamps you can think of, as well as opening datacenters around the globe.

Cloud is cheaper than your own hosting regardless on how you calculate the costs. Get used to it.

Dmitry

This Wednesday was probably the first day on the (potentially long) path to Adobe Flash decline: the most popular video site out there – YouTube – started offering videos in Flash-less mode for browsers which support HTML 5 and h.264 video codec.

This means that today the option is available for Chrome and Safari. Then at some point they will likely add the Ogg codec and support Firefox, or help Firefox get native h.264 codec support. And then IE9 ships and all latest browsers will play videos natively. Flash will no longer be required for video, and why would anyone want it then?

The whole story of Flash in retrospect is going to be an interesting one. Adobe had 95-98% penetration in PC market for years and could not expand its adoption beyond video. They tried: kept improving the tools, added offline, even tried open-sourcing it, and getting to the mobile market – but Flash has not become an application platform – video is what most people use it for, and this exact segment is now under the HTML 5 fire.

Can anything help Flash now?

If Flash failed, does Microsoft’s Silverlight have a chance? So far they are basically following Adobe’s path of pushing it to consumers via video streaming websites while beefing up the developer story. As far as I understand, Microsoft’s thinking is that they can succeed because their development story is much better and their development community much bigger.

I guess we’ll have the answer within next couple of years.

identitiesIn the brave new world of enterprise applications going to the web do we need an identity directory spawning the internet, and if so, will email address system become the de-facto global identity system?

Global directories are obviously not new. There were efforts like X.500 and like, but then we kind of got scaled back to company-wide identities instead. So most of us just use a username (or DOMAIN\username) to log into our computer at work, and do not care that this is not globally unique at all. Sounds like the internet will make us care again.

Suppose you are designing a global enterprise SaaS application and you absolutely do not want to maintain user identities yourself (because this would obviously be a headache both to you and your customers).

Federation is the answer, right? So OK, you go out, pick the federation standard you like (for example, WS-*) and you should not care about user identities. Just redirect users to their actual identity providers – in enterprise world this will likely be Active Directory – and let users in once you hear back that the user is authenticated there. Ay, there’s the rub – you still need to know something about user to decide where to send the user to authenticate.

This problem is known as Realm Discovery – even in the federation world you still need to know where the user comes from. Here are a few options which I see:

Identity Selector on user computer

If all users on all computers had Windows CardSpace you could never prompt users for anything and just use those. However, the reality is that this technology has not taken off (yet?) so you cannot rely on it.

URL-based discovery

You could ask your customers to use custom URLs to access your site: e.g. CustomerA.MyWebService.com. In that case you know where the user comes from and can redirect to proper federation partner. If you can have all users go to this custom URL instead of generic MyWebService.com this might be a pretty good idea.

The problem is that you probably cannot. Your users will probably want to be able to log in from your generic site as well. Even worse, they might want to delegate tasks in their services to users from other companies – and in this case they will have to learn and supply the CustomerB URL as well when setting up this delegation – which becomes kind of messy.

Ask the user

If the user comes to your generic URL and wants to authenticate (or is authenticated and want to delegate rights to another user), what do you ask the user so you know where to redirect her for authentication?

Displaying a drop-down list with all your customers is probably not a good idea.

DOMAIN\username notation won’t work either – intranet domains are not globally unique.

I would argue that email address is probably the only usable solution here:

  • Email addresses and email domains are globally unique.
  • By this time, every user on this planet knows her email address and email addresses of whoever they would want to delegate rights to. And obviously despite spam we are all trained to supply our email addresses when prompted by a credible service we need.

Where does this lead us? Not only we probably need a global directory, we actually already have one. Long live email addresses. 😉


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The posts on this blog are provided “as is” with no warranties and confer no rights. The opinions expressed on this site are mine and mine alone, and do not necessarily represent those of my employer Jelastic or anyone else for that matter. All trademarks acknowledged.

© 2008-2012 Dmitry Sotnikov

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