Tuesday, June 18, 2024

Server Farms to SaaS: "Cloud Revenues Will Bust Through $1 Trillion Before Too Long"

From The Next Platform, May 21:

Cloud is an attitude as much as it is a consumption model. So is parfait, and as we all know from Shrek, “everybody loves parfait.”

We love to track the parfait of cloud revenues, from the lower chocolate layer of server, storage, and networking levels commonly abbreviated IaaS, to the middle butterscotch layer of platforms and frameworks shortened as PaaS, to the French vanilla layer of business process automation called BPaaS, and finally to the homemade whipped cream or ice cream of application software known as SaaS.

The IT market has been trying to create a parfait of hardware, software, and services spending since the dawn of the commercial computing era six decades ago, and we have certainly perfected it in recent years. It was only because companies were control freaks – for both their infrastructure and their balance sheets – and were looking for the cheapest way to run very expensive infrastructure that we had many decades of on-premises, capitally expensed corporate computing. IBM (and other companies) charged so much for renting their gear that companies decided to build glass houses and show off their economic might by owning their own mainframes rather than renting them, and Big Blue was compelled by two antitrust lawsuits with the US Department of Justice to let them do that at a reasonable price. And thus, on premises computing was born.

With the commercialization of Internet technologies in the mid-1990s, and massive investments in fiber optic networks that spanned the globe, it became technically and economically possible to think about geographically distributed computing and this thing we used to call “application service providers,” which was an early attempt at delivering SaaS. The infrastructure wasn’t cheap enough or good enough, and this largely failed. There were some exceptions and some ASPs made it – Salesforce being perhaps the biggest exception.

And with the advent of Amazon Web Services in early 2006, hyperscale was married to utility-style infrastructure that could be turned off as easily as it could be turned on and the cloud as we now know it, with all of its layers, was born. To be fair, Google Compute Engine started out as a PaaS and the search engine giant and cloud wannabe had to be dragged kicking and screaming into exposing its infrastructure at a more primitive IaaS level that customers had been taught by AWS and then later Microsoft Azure to expect.

And so, we have this cloud parfait. Some eat all the layers, some just go for one or two layers. But the import thing is you can eat whatever layers you want, and virtually as much or as little as you want, and you only pay for what you eat....


Maybe not so much SaaS. When Salesforce (CRM) reported on May 30 the stock went into free fall, dropping from ~$271 to ~$218. A couple of the headlines:

Salesforce expects lowest quarterly growth in two decades

Salesforce Earnings: Slowing Growth and Risk of More Disappointment Ahead

I think that knocked them from the #1 perch and allowed ADBE to move up the rankings.