Thursday, January 28, 2016
Telecoms Look Past Cisco and HP to Open Source Hardware
It has to. Over the past 15 years, Google’s network grew so large that the company needed a cheaper, more efficient way of building it. Traditional gear from traditional suppliers was too expensive, overly elaborate, and difficult to manage. Therefore, Google designed its own gear, working with various firms in Asia and elsewhere to manufacture a more streamlined breed of hardware, including computer servers and the networking switches that send data between servers. Most notably, Google built switches that could run its own software—software it could readily reprogram to suit its needs. This wasn’t possible with traditional gear.
It was a very Googly thing to do. But the implications extend well beyond Google. As Facebook’s social network expanded to hundreds of millions of people, it too designed its hardware. Then, under the aegis of a nonprofit, it called the Open Compute Project, Facebook open sourced these designs. Suddenly, other companies could use the designs, improve them, and—through mass production–drive down the cost. Companies like Apple, Microsoft, Rackspace, and Goldman Sachs did just that. This new breed of hardware is not just a Google thing. It is the only viable way of building the largest online services.
Now, a new wave of companies aims to push this movement even further. This morning, four big-name telecoms— AT&T, Verizon, Germany’s Deutsche Telekom, and South Korea’s SK Telecom—agreed to join the Open Compute Project. Through a sub-project dedicated to the needs of telecoms, they too will explore open source servers and networking equipment that can boost efficiency and reduce costs.
“Everyone is looking for that same synergy and agility,” Gagan Puranik, a director of architecture planning at Verizon, says of his company and others who have joined Facebook’s experiment in open source hardware. “The learning and the sharing will go both ways.”
The announcement is notable because, as you would imagine, telecoms are among the world’s largest hardware buyers. This will yield another sizable shift away from traditional data center gear and towards the sort of streamlined, programmable gear fashioned by Google and Facebook.
Yes, that undermines companies like Cisco and HP. “The telecoms are realizing the value they get out of a traditional supplier is continuing to diminish,” says JR Rivers, who once designed hardware at Cisco, helped Google develop its networking switches, and now sells Google-like networking software to large online businesses, including telecoms. “Open Compute is natural way of dealing with this. It helps highlight a more open and malleable hardware supply chain ecosystems, as opposed to one-stop shopping form existing suppliers.” That said, companies as if Cisco and HP have moved to accommodate this shift, selling (at least some) gear that mimics the Google Way.
Long Time Coming
Today’s announcement is a long time coming. AT&T has long said it intends to “virtualize” 75 percent of its network by 2020. In other words, it is moving towards a Google-like model where network logic sits in the software rather than the hardware. This is now called “software defined networking,” or SDN, and it means AT&T is freeing itself from old-school gear that was not so easier programmed.
According to reports, AT&T has already designed some of its own networking gear to accommodate this shift, and in June, it opened sourced some of these designs through the Open Compute Project (though it was not an official member). The project encourages companies not only to use and modify existing open source designs, but to donate their own as well.
Yet, as Rivers points out, these telecoms may not adopt the latest technology as quickly as their Internet counterparts have. “These guys move way slower than any of the web companies,” he says of the large telecoms. “I don’t expect anything radical happening in the next year.” However, it is telling that these companies are embracing this movement—and embracing it so publicly.
What does Facebook get out of this? After all, it is not a telecom. At first blush, it does not benefit from hardware built for an AT&T or a Verizon. But there’s an indirect benefit. Facebook’s vast social network runs atop the networks operated by these telecoms. What’s good for them is good for Facebook. In fact, Facebook has long explored ways of expanding the Internet into places that don’t already have it, using everything from drones to satellites.
When it comes right down to it, this is just another way. “We’ve been focusing a hell of a lot on connecting the world,” says Facebook head of architecture Jason Taylor, “and that’s not something we’re going to do alone.”
Apple Issues AC Adapter Recall A Week After Microsoft
The recall involves two-pronged wall plug adapters sold with Macs and the 10-watt adapters shipped with iPads between 2003 and 2015, in Argentina, Australia, Brazil, Europe, New Zealand, and South Korea. It doesn't affect adapters designed for the US, Canada, China, Hong Kong, Japan, or the UK. The recall also does not include USB power adapters, but it does apply to adapters included in Apple's $29 "world traveler" kit.
Apple described the affected adapters as having "either four or five characters, or no characters, on the inside slot" where they attach to the main Apple power brick. The company says it is aware of 12 incidents that have occurred around broken adapters in the past 12 years, though it did not specify what those incidents were.
The, uh, shocking news comes a week after Microsoft's recall of some Surface Pro power cords, after a "small number of customers" reported that their AC power cords were overheating. And in 2014, HP had to issue a recall for six million laptop cords deemed to be a fire risk. That incident followed a smaller recall for HP in 2013, this time in conjunction with Google after some Chromebook 11 cords overheated and melted.
Recalls aren't especially common in Cupertino, but they tend to get a lot of notice, because Apple. In August the company said it would replace faulty cameras on some iPhone 6 Plus models, and in June the company recalled the Beats Pill XL speaker due to fire hazard (a product that came to market before Apple acquired Beats).
Way back in 2008 Apple launched a Power Adapter Exchange Program for the iPhone 3G due to similar-sounding risks: prongs could "break off and remain in a power outlet, creating a risk of electric shock." And in 2012 Apple launched a similar replacement program for European power adapters sold with the iPhone 3GS, 4, and 4S.
Rising Cloud Sales at Microsoft Amazon Reflect Bigger Shift in Enterprise Market
The growing popularity of cloud services is reflected in rising revenue in both of their cloud businesses. Amazon and Microsoft Thursday reported significant growth in their respective cloud businesses, and have been edging out other competitors including Alphabet Inc.’s Google and International Business Machines Corp.
The market is growing, in part, because a number of companies including Netflix Inc.NFLX +3.58% and GE have decided to drastically reduce or eliminate their data centers. “There is a population of CIOs who have looked forward five years and said ‘I want to get out of the data center business’,” said Dave Bartoletti, principal analyst at Forrester Research. To do that, they’re starting to move core business applications to the cloud. Netflix, for example, unplugged its last data center at the end of last summer.
GE has said that it is moving from 34 data centers down to four data centers. “Those four data centers will only hold what we value most secretly, our secret sauce that differentiates us completely in the environment – everything else is going to AWS from our perspective going forward,” said Jim Fowler, CIO of GE, at an Amazon Web Services conference in Las Vegas in October.
The market for cloud services is expected to rise to $27.4 billion in 2016, up from $14.9 billion in 2014, according to Synergy Research Group Inc. Over half of that revenue comes from Infrastructure as a Service where Amazon Web Services is the clear leader, said Jeremy Duke, Synergy founder and chief analyst. As of the third quarter of 2015, Amazon Web Services had 44% of the market, compared to Microsoft’s 9%, IBM’s 4.8% and Google’s 3.8%.
AWS sales rose to $2.4 billion in the most recent quarter up from $1.4 billion during the same period in 2014. Amazon Web Services, in a conference call with analysts Thursday afternoon, said it has over 1 million customers. Many of those customers are small companies, according to Mr. Duke, that have used AWS to develop and test software.
Microsoft which also reported quarterly earnings on Thursday, said its “Intelligent Cloud” segment grew 5%, or 11% excluding currency effects, during the quarter to $6.3 billion, led by sales of its Azure cloud services, which more than doubled over the period, growing by 140%. Microsoft’s cloud business is anchored by Azure, but also includes sales of a broad range of enterprise services and products.
Microsoft’s goal is to reach a $20 billion run rate for commercial cloud sales by 2018, driven mostly by large enterprise customers. “Enterprise cloud opportunity is massive,” Microsoft CEO Satya Nadella said on an earnings call Thursday. “The move to the cloud has expanded the market opportunity that we’ve had more than ever before. We’re operating in a much bigger market,” he said
The latest numbers show Microsoft is doing a “masterful job keeping Office 365 subscription growth high enough to offset declines on Office,” said Gartner Research Vice President Merv Adrian.
But many Fortune 500 companies are looking to maximize their current way of doing business –with an on-premises network –with cloud in a hybrid manner. They’re looking to have elements of cloud built into their private networks. That’s where Microsoft and International Business Machines Corp. and Hewlett Packard Enterprise HPE -1.49% are working hard to move that Fortune 500 base forward, he added.
While AWS has reach, Microsoft may have the edge among large companies due to its legacy relationships and early focus on hybrid environments. “Jeff Bezos is looking at that massive revenue piece and saying, ‘I want a piece of that,” said Mr. Duke. Amazon Web Services typically highlights large companies such as GE, Nordstrom Inc.JWN -0.06% and Netflix at its conferences. “While those are the trophy accounts, they’re not the most common accounts,” said Mr. Duke.
As for GE, it plans to migrate over 9,000 workloads into AWS over the next three years. At GE Oil & Gas, for example, over half of the core applications are running on AWS today. In one case, GE moved a configurator application used by salespeople to give customers quotes on products. GE spent $62,000 to run the application and took in $600,000 in orders. Changes to the application took 20 days.
“After AWS, that same app runs for $6,000 and we can deploy code in less than 2 minutes,” said Mr. Fowler at the AWS conference. “This is where we’re going,” he added.
Microsoft (MSFT) Q2 2016 Earnings Xbox Live Shows Strong Holiday Growth
Still, Microsoft did emphasize a strong holiday season for Xbox One and growth in the number of Xbox Live active users.
There are now 48 million active Xbox Live users, a 30 percent increase from the same period a year ago. Xbox Live added nine million users for the three months that ended December 31, 2015.
"It was a strong holiday season for Microsoft highlighted by Surface and Xbox,” Kevin Turner, chief operating officer at Microsoft, said in a statement. Microsoft emphasized deeply discounted Xbox One bundles with exclusive games "Halo 5: Guardians," "Rise of the Tomb Raider" and "Forza Motorsport 6" during the holiday season. The addition of Xbox 360 backward compatibility was also an important factor in the strong holiday for Xbox One.
While mentioning the Xbox One was outpacing the Xbox 360 and the former was the best-selling console in Xbox history, there have been no concrete sale figures since an earnings release in July 2015. Microsoft reported 1.4 million Xbox One consoles sold during that period.
VentureBeat estimated 1.99 million Xbox One units sold in Microsoft's fiscal first quarter ending Sept. 30, with around 15 million Xbox One consoles sold in total since it was launched on November 2013.
Ahead of Sony's earnings report Friday, the Japanese electronics giant has shared PS4 sales figures up to January 3, 2016. Since its launch in November 2013, Sony has sold 35.9 million units globally. Sony also announced a 60 percent year-over-year increase in PlayStation Plus subscribers during the same time.
Microsoft Continues to Obscure Its Real Cloud Revenue
Microsoft beat analyst expectations for its most recent quarter, pulling in a profit of 78 cents a share on $25.7 billion in revenue, versus predicted 71 cents on $25.26. The company touts to strong growth in its “Intelligent Cloud” division as one of the main highlights of the quarter. Year over year, the division grew by 5 percent to $6.3 billion in revenue.
That certainly bodes well for the Microsoft, which is seeking to reinvent itself as a mobile and cloud computing company, markets led by rivals like Apple, Amazon, and Google. But Microsoft’s numbers say little about how it actually compares to those rivals.
At first glance, it appears that Microsoft is making far more on its cloud services than Amazon, which made $2.41 billion last quarter from its Amazon Web Services division. The problem is that, in reporting its results, Microsoft bundles its Azure line of cloud services with Windows Server and other traditional enterprise software sales together under the label “Intelligent Cloud” without revealing what percentage of that total actually comes from Azure. That makes an apples to apples comparison with Amazon Web Services impossible.
Make no mistake, Microsoft’s cloud is growing fast. Azure revenue grew by 140 percent, nearly triple what it was at this time last year. But without knowing the actual starting numbers, it’s impossible to tell for sure if it’s actually making a dent in the cloud market.
That certainly bodes well for the Microsoft, which is seeking to reinvent itself as a mobile and cloud computing company, markets led by rivals like Apple, Amazon, and Google. But Microsoft’s numbers say little about how it actually compares to those rivals.
At first glance, it appears that Microsoft is making far more on its cloud services than Amazon, which made $2.41 billion last quarter from its Amazon Web Services division. The problem is that, in reporting its results, Microsoft bundles its Azure line of cloud services with Windows Server and other traditional enterprise software sales together under the label “Intelligent Cloud” without revealing what percentage of that total actually comes from Azure. That makes an apples to apples comparison with Amazon Web Services impossible.
Make no mistake, Microsoft’s cloud is growing fast. Azure revenue grew by 140 percent, nearly triple what it was at this time last year. But without knowing the actual starting numbers, it’s impossible to tell for sure if it’s actually making a dent in the cloud market.
Tuesday, January 26, 2016
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