Dave Jilk's Cloud Predictions for 2011

1. There will be a significant influx of shared hosting and telecom providers into the IaaS marketplace.
Large or small, hosting and data center providers are realizing that Infrastructure as a Service offerings will eat their lunch if they don’t add the same capabilities as part of their mix. Quite a few players have been working on this for a while (it’s not easy), and will be ready to launch in 2011. For the rest, there will be a feverish competition among VMWare, OpenStack, enomaly, Eucalyptus, Hexagrid, and others to provide their virtualized data center management layer.

2. Open source technology stacks will continue to dominate in IaaS / PaaS, but Oracle will come out with some strong offerings that begin to entice enterprise applications to the public cloud.
Unlike Microsoft, which has embraced the cloud by adding the word “cloud” to its marketing, former cloud naysayer Larry Ellison now seems to understand why the “cloud” is important as a distinct angle on some old and some new technologies. Oracle has started with the Exalogic hardware and by putting some tool and application images on Amazon, and I predict we will see even more rapid progress from them in 2011, in both public and private cloud environments. Some of this will continue to come from its acquisition of Sun Microsystems, which was an early leader in cloud technology. One consequence of Oracle’s cloud initiatives is that enterprises will start looking more seriously at putting major applications in the public cloud.

3. Amazon's earnings from AWS will exceed those of the rest of the business, and by the end of the year there will be rumors of a spinout.
As best I can tell, AWS as a unit may have produced a third of the company’s overall earnings in 2010. Because it continues to grow at a breakneck pace, while Amazon’s retail business is more closely tied to macro factors (and has lower margins), it is entirely possible that AWS will earn more than retail in 2011. With two such diverse businesses, having very different economics and valuation metrics, there will be pressure to split the two units. I have heard that Bezos wants to build a heterogeneous industrial conglomerate; if this is correct, then the split will probably not happen, but that won’t stop the rumors.

4. Consolidation in cloud capabilities - particularly PaaS and services that add value to IaaS - will accelerate.
OK, I admit, I have a vested interest in this prediction. But I do think that the acquisition of Heroku by Salesforce.com, and of Makara by RedHat, are harbingers of an important consolidation direction. Infrastructure as a Service on its own is only accessible to those who have strong system administration capabilities. To tap into developers who have no interest in sysadmin, and end users who like the flexibility of on-demand hosting but do not have the requisite skills, services that make infrastructure easier to deal with are essential. Larger companies who have serious cloud strategies will want to offer those capabilities with a fast time-to-market.

5. There will be a rollup of multi-tenant open source SaaS providers.
I might be a little early on this prediction - it could be more of a 2012 event. But it seems likely that someone will come along and roll up some of the SaaS providers who offer multi-tenant single-application hosting, particularly those hosting open source applications and who have raised venture capital financing. Many of these companies will hit a wall as they realize their addressable market does not justify the capital invested and that their value added is relatively slim; nevertheless they have (and will have) significant market presence and the users will be valuable to a consolidator.

6. The numerologists will be out of control on Veteran’s Day.
I’ve already seen them talking about 11/11/11. But I thought we were done with two-digit years.