A statement from Jeff Hammerbacher’s presentation at SINA Innovations re-induced a line of
thought…about the future of data storage and processing.
Many years back, no one
had thought that sending messages could be free. Enter e-mail and the likes of
Hotmail – we suddenly had a free way to send messages and a way which was
embarrassingly faster compared to what postal mail could achieve. The
technology existed for long but was not open to the mass consumer. Among the
various technologies that propped up the internet revolution, e-mail occupies a
significant king maker role.
Let’s pan out now to 2015 (3 years from now) – could we have
a Cloud pioneer who will offer free data storage with quality of service and
may be charge little or nothing for processing? By that time, it is desired
that processing and compression would have also improved exponentially so that Hadoop
would be running mammoth jobs in a few minutes on multi-cores with leap and
bound improved versions of Impala and Infosphere of the software ecosystem.
Could that be a possibility?
Let us look at business model prospects:
* Expense (big items only listed below):
-
Massive storage hardware
-
Immense computation power
-
Staff
-
Location related expense
-
Marketing
* Revenue from:
-
Paid SaaS for custom needs
-
Advertising Campaigns
-
Consulting and support
The obvious question looking at the revenue section comes would
these be sufficient to factor in the costs?
Let us critically first analyze the three revenue streams:
-
SaaS – there is a mixed opinion on
success of SaaS yet in terms of revenue pie. While Elastic MapReduce claims to
have launched 3.7 million clusters since 2010, there are many other software
which still browbeat about the traditional packaging licensing model. Many
point to the free tiers and university packages also among these cluster
numbers. The unrelated success of Google Docs, Prezi etc. also point to the
subscription success but with limited $ returns. So, is SaaS really worth the
buck? More thought and debate needed.
-
Advertising – there is a certain
level of skepticism about pay per click model and pay per impression. So while
MapR may be hogging the background image on GigaOm posts and NetApp on Adwords,
does it make them a darling of the Big Data followers? Do we need to evolve to
a better lead generation mechanism especially with this niche audience? Points
to a need of Analytics for analytics - which could very well mean analyzing
MapReduce job data to suggest offers to IT decision makers.
-
Consulting – this is bound to be a
major buck earner. However, the doubt comes in with low labor cost arbitrage.
While the Big Data strategy consulting for now is still highly expensive, the
technology consulting, implementation and support are bound to hit the labor
rate trough by end of 2013. So, is it the volume of consultants or variety of
skills or velocity of delivery that you would prefer for your absolute quality
delivery?
With this critique, it is obvious there are 3 basic
innovations required at this stage to achieve the key margins in our envisioned
free storage and processing world:
1-
Drastic reduction in cost of
hardware – especially storage and processors
2-
Innovation in business models. Let
us elaborate on this point futher.
a.
Most of the enterprise customers
today want results from their analytics projects. They don’t want to build up a
million $ warehouse which by the time is built is already outdated with newer
systems and newer business requirements. So, could there be an era of revenue
sharing Big Data projects or other $ earning agile proposals?
b.
The enterprise deals major portion
of revenue comes from software and services. Hardware occupies a decent chunk
but also acts as a road blocker more than once with cost, lead time and
depreciating asset cost. Admitted mostly, many enterprise unless compelled by
regulatory and security factors would be more than happy to not own the
hardware. So, the business model problem statement is how do we optimize the
cluster ownership cost for a customer?
3-
This brings us to third vital
factor of security and governance. Many big enterprise would not like to use a
public or virtual private cloud. Till the time there are strong showcase of
avant grade security implemented in cloud environments, those concerns would
persist.
The nay-sayers are bound to point out that there is no free
lunch. The optimists are pointing out at hard work done to bring us to a level
at which we stand today. Lots of debating questions, lots of mixed opinions –
but would the answer to all these be a visionary entrepreneur who can deliver
on this challenge? Is anyone game for this challenge?
Could be a game changer for sure...
ReplyDeleteHardware has been China stronghold for long - may be an entrepreneur from there ? or may be the strong EMC, IBM labs over there leading the way?