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Yesterday Dries Buytaert, original creator of open source content management software Drupal, wrote a blog post highlighting how open source can play a major role in enterprise SaaS. In his post, he points out to SaaS being dominated by proprietary players and talks about how open source can play a significant role in avoiding vendor lock-in.

At the same time, I think we have an opportunity to go beyond that, and to redefine the Software as a Service model based on Open Source values, almost exactly like we started doing 10+ years ago with off-the-shelf software. Almost all Software as a Service providers employ a proprietary model — they might allow you to export your data, but they usually don’t allow you to export their underlying code. While a lot of these services might be built on Open Source components, they have a lot more in common with proprietary software vendors than Open Source projects or companies.

There is room for Open Source companies to disrupt this model, and it is probably not something that can be done without the help of Open Source companies.

This is clearly a call for open source vendors to wake up and dominate the SaaS space. However, some of the bloggers have interpreted it as a criticism of SaaS by Mr. Buytaert. Part of the reason could be due to the binary approach taken by many in the tech field in the open source vs proprietary debate. They see it as open source or proprietary but in a truly open society, it should be open source and proprietary giving the customers choice to decide. 

With this in mind, let us try to understand the dynamics at the interface of open source and cloud computing worlds. There are two schools of thought regarding the role of open source in the cloud based era. One school of thought lead by Tim O’ Reilly calls for open standards, open protocols, open architecture, etc. with the claim that architecture trumps licensing anytime. However, the other school of thought, to which I belong and promoted by many like Simon Wardley of Canonical and Sam Ramji of Sonoa Systems, puts emphasis on open source along with open standards and protocols. I have emphasized this point many times here in this blog including this post and my talk at Cloudslam ’09. I really don’t see a diminished role for open source in the cloud based world. From Mr. Buytaert’s post, it is amply clear that he is firmly in the latter camp. He also believes in the SaaS as the future of how applications are consumed and he strongly advocates a role for Open Source in the SaaS world.  

Let us face it folks. Even in the traditional desktop computing world, open source didn’t gain much traction on the consumer side except for some of us who used Linux and other open source software religiously. Ultimately, open source attained its nirvana in the enterprise. Apart from open source fanatics like us, whatever little traction open source got among the consumers and small businesses were due to the lower cost or, rather, no cost of many of these products. It is only the enterprise that found the real value (both economic and the importance of openness) of open source. 

In the SaaS world, it doesn’t make sense for consumers to expect the source code (not including the philosophical considerations regarding openness by some of us) because it will cost them more to host the code themselves than use the services of proprietary SaaS vendors. It is only in the enterprise SaaS space, we can expect the users to derive the full benefits of the openness. This opens up a great monetizing opportunity for enterprise open source vendors. By releasing a SaaS version of their products, they can gain traction among the enterprise customers. As this trend progresses further, we may even see the adoption of open source SaaS trickling down to small businesses first and, eventually, to consumers. But the focus should be on the enterprise SaaS space.

In short, instead of debating whether Mr. Buytaert was critical of SaaS or not, let us get the open source vendors embrace SaaS overwhelmingly and offer open source alternatives to the proprietary SaaS offerings. A real free market approach is one where customers have the choice to decide on what they want.

For a long time, I am debunking the idea that the cloud infrastructure market will consolidate and we will end up with a handful of monopoly players. In my opinion this is short sighted idea and it is due to the lack of understanding of the diverse needs of users around the world. One way to counter such a consolidation is by supporting open federated clouds, an idea advocated by Tim O’ Reilly. Off late, we are seeing the idea of regional clouds gaining traction in the market. The adoption of regional clouds is driven by the fact that, in some cases, customers need more than just the cloud economics. They want to know where their data is located and where their compute power is coming from. They also want to have a direct interaction with their cloud provider, something that is not available with the giants like AWS or Google. In US, Minnesota based ReliaCloud is the poster child for the so called regional clouds. There are many such regional players, mostly from the traditional hosting world, who are repositioning themselves as cloud providers. One such player from Germany is ScaleUp Technologies. Recently, I had a chance to talk with their CTO, Christoph Streit, and Kevin Dykes, their Director of Business Development.

ScaleUp Technologies is based on the premise of Open Federated Cloud ecosystem. They are a spin off from the German webhost called Internet4you. They have built their cloud architecture on top of 3Tera’s Applogic product (see our coverage of CA’s acquisition of 3Tera). As it is the case with smaller cloud providers, they have two datacenters in Germany catering to their cloud business. However, the fact that their cloud is built on top of Applogic allows for federation and they have partnered with XSeed Co. Ltd., a Japan based cloud provider also built on top of 3tera’s Applogic platform. This partnership allows ScaleUp to let their customers tap into XSeed’s infrastructure (and vice versa) right from the their UI. This is a perfect example of an open federated cloud ecosystem in action, albeit a smaller one.

ScaleUp’s cloud offerings comes in three different flavors

• Self Service Model: This is similar to Amazon Web Services and other cloud providers. However, ScaleUp’s offerings differ from AWS’ offerings in terms of certain additional features like availability of templates based on software stacks (for example, LAMP stack). These readymade templates makes it easy for the customers to get their infrastructure running quickly. Similar to AWS and other public cloud providers, load balancing and auto scaling are part of their cloud offerings
• Virtual Server Infrastructure:  This is similar to Virtual datacenters with a collection of large number of servers like web servers, database, servers, etc.
• Private Cloud: Single-tenant cloud infrastructure for customers who want complete control over their perimeter

I asked them about the European cloud market and what kind of traction they are seeing in the market. Christoph told me that they are finding it difficult to convince customers to move their assets to cloud. He told me that they have to put considerable efforts to educate customers about the benefits of cloud computing. In his opinion, European market is lagging behind US market by at least a year on cloud adoption. I also asked him about their support for open standards and he told me that he checked OCCI initiatives sometime back but they are not ready enough for them to embrace just yet. He said they are not participating in any standards initiatives at present but it may change in the future. In my opinion, it is important for such small cloud providers to be part of the initiatives around open standards. I feel that these smaller players have to adopt open standards to fend off competition from bigger players and, also, for the very success of the open federated ecosystems.

The idea of regional federated clouds is slowly taking off. With more and more traditional web hosts repositioning their strategy towards clouds, we are going to see further increase in the number of regional cloud players using the federated model. More importantly, regional cloud providers like ScaleUp Technologies are crucial to raising the awareness about cloud computing in different parts of the world and in ensuring more widespread adoption.

Google has acquired Picnik, the Seattle based online photo editor. I am a big fan of Picnik and I love the app so much that I have been paying the annual subscription to use the pro features. This news is exciting and my congratulations to the team members of Picnik. In a blog pos t today, they announced the acquisition

And all this leads us to today’s exciting news: we’ve just been acquired by Google! What does this mean for Picnik? It means we can think BIG. Google processes petabytes of data every day, and with their worldwide infrastructure and world-class team, it is truly the best home we could have found. Under the Google roof we’ll reach more people than ever before, impacting more lives and making more photos more awesome.

Here are my initial thoughts on the news

• This is an awesome news for the Picnik team who recently announced the one billionth edited photo and this acquisition only confirms the awesomeness of their product
• Picnik already has a deal with Yahoo’s Flickr. I am sure this move will push Flickr away from Picnik and, possibly, more closer to Microsoft
• Even though Google is a major SaaS player, they don’t have a browser based photo editing software. Their existing desktop application goes against the idea of relying only on SaaS. With Google’s push for Chrome OS, it is only natural that they have a browser based photo editorOtherwise, it will be difficult to gain traction for ChromeOS with consumers without relying on a third party vendor. With Google push against Flash, there is no way they will want to partner with Adobe to offer an online photo editor
• One of the biggest attractions for me was their browser plugin which lets anyone take any image from any website, edit and save it on their computer or one of the online photo sharing sites. I hope Google will keep this extension as a part of their plans
• I am hoping that Google will not charge for the pro features and let paid customers of Picasaweb use it for free

Update: Here is Google’s post welcoming the Picnik team.

Yesterday CA Inc., the enterprise IT company formerly known as Computer Associates, announced its intent to acquire the cloud computing provider 3Tera. Even though the details of the deal are not available, there are some unconfirmed reports going around the blogosphere and twitterverse saying it could be 30x the current 3Tera revenue. This acquisition follows CA’s other acquisitions relevant to cloud space like Cassatt, NetQoS and Oblicore. This news has the potential to shake up the enterprise cloud computing market.

Traditionally, CA is a leading player in Enterprise IT Management software for mainframes and distributed systems. After the controversy surrounding the indictment of their then CEO, Sanjay Kumar, in the mid part of last decade, they put their house in order and started pushing products around “Lean IT” campaign. As cloud computing gained steam towards the end of the last decade and the recession forced the enterprises to take a second look at the cloud for adoption, CA was busy acquiring companies like NetQOS, Oblicore and Cassatt. But there were no telltale signs of any immediate cloud play. It appears, with all these acquisitions, CA was putting the necessary pieces of puzzle in place to take off as a strong and credible IaaS player. 3Tera’s acquisition gives us some hints about what is going to come out of CA in the coming years. It also sends a unambiguous signal that they are in for a long haul.

CA’s path to cloud nirvana through acquisitions is hardly surprising because CA is, in fact, built by a series of acquisitions from 1977 onwards. Already the blogosphere was buzzing around with the news that CA plans to spend $300 million buying cloud startups. So, their strategy to buy 3Tera is not at all surprising. I will briefly analyze the impact of this acquisition.

• First and foremost, this deal firmly puts an end to the spin that cloud computing is all hype and a marketing term. This move by a traditional IT vendor is a clear message that cloud computing is the future for the enterprises. We are soon going to see more and more enterprise customers jumping into the cloud bandwagon.
• This could also be considered as a beginning of consolidation in the infrastructure space. Even though I don’t believe in the idea of monopoly of handful of infrastructure players, a shakeup through consolidation will always be there in a maturing market. This just shows the maturation of the cloud computing market leading to more and more enterprise adoption.
• This also puts CA as one of stronger contenders in the Cloud infrastructure marketplace. It is like a parachute for CA to jump right into the middle of this competitive marketplace without any hard work. Well, we cannot consider CA to be an innovator like other cloud startups in the market and the only way for a titan from the old world to get into the mix of the new generation is by acquiring a hot company like 3Tera.
• This is also a good news to other small players in the industry. It legitimizes their approach and offers them hope that someone else might come knocking on their door pretty soon. Overall such a consolidation advances the cloud marketplace to the next level.

Even though it is exciting from many angles, I do have some concerns about this merger.

• When I think of this acquisition of 3tera, the first thing that comes to my mind is “why CA?”. Personally, I strongly believe that a titan from a previous generation cannot innovate in the next generation like some of their newer counterparts. I am sure some of the fellow members of Clouderati will vehemently criticize this belief but I think of it as IBM in the desktop world dominated by Microsoft. They can do some interesting things but the innovation vigor will be lacking. Frankly, I just don’t like a old world enterprise guy messing around with clouds.
• Another important concern is what will happen to Applogic? Will it continue to be an independent product? From all the indications in the press, I get a feeling that it is going to be tightly integrated with CA’s existing product lines. If it happens, some of the existing 3Tera customers, especially the small and medium sized ones, will be left in a lurch. A move away from the current standalone version of Applogic software could be disastrous for these 3Tera’s clients. I spoke with one of their clients today and asked them about their strategy in the aftermath of this news. They told me that they are cautiously optimistic and their sources in 3tera has given them assurances about long term support for Applogic. Realizing this predicament of 3Tera’s customers, their competitors have already started to fish in the troubled waters.

It will be interesting to see how it plays out in the long term. It will also be interesting to see who is the next target for CA with the rest of $300 Million they have have in the pockets.

We live in an era where we consume computing through API and socialize through mashups. Our wide ranging computing needs from mobile apps to social networks to SaaS, brings API to the forefront of our computing senses. To cater to the needs of this API generation, Santa Clara based Sonoa Systems has already launched a service called Apigee which is still in private beta. Apigee is a freemium, self service, API management tools for Web APIs.

For websites like personal homepage or blogs, we use Google Analytics tool to get information on the website visitors and their activities. However, tools like Google Analytics are not useful with APIs. In this era where we consume everything through API, there is clearly a need for a tool like Apigee. Sonoa is already a leader in the enterprise API analytics marketplace. With Apigee, a robust service built with Sonoa’s expertise, they are positioning themselves to lead in the cloud computing and social computing era. Apigee is well suited to help any provider who exposes their services through APIs. By using the freemium, self service model, they are emulating the strategies predominant in the SaaS marketplace.

Earlier Sonoa went after the Mobile market space with a proxy service called Mobile App Acceleration. This service helped mobile developers speed up their mobile application by several fold. Now, through Apigee, Sonoa is targeting developers who develop apps for social networking platform. Apigee provides insight into the emergence of new application trends, with the most popular applications revolving around location-based functionality, as well as a growing social media mashup trend. Popular examples of applications currently using Apigee include:

• mLocal: Allows users to easily access local online classifieds ads;
• Social Mention: Providing indicators of social sentiment as captured across popular social networking platforms;
• Flickr Photosets: Built using the Flickr and Facebook APIs proxied through Apigee, it’s the fastest and most intuitive Flickr app on Facebook, enabling users to view and share comments.

Their free basic version allows upto 10,000 API requests/hour. Their premium service for higher traffic volumes is less than $100/month. Some of the significant features in the Apigee service are

• API Analytics
• API Protection
• API Control

Today the company announced the addition of some new security features that wil help the service gain further traction. To start with, there is a new revamped web interface. They have also added animated API setup and rate limiting dialogues to speed up the setup process for the users. In addition to these features, they have also added some security features like SSL support for APIs using HTTPS and opening up of prominent APIs including PayPal.

This service completely simplifies how service providers can monitor the traction, user behavior, etc. of their service at a very low cost. This is a great tool for web developers trying to mashup services from many different sources. There is a huge potential for this service in both consumer and enterprise space. As business is picking up in the ecosystems around mobile platforms and social networking platforms, a tool like Apigee could be a real game changer.

Open-Xchange, pushed as an open source alternative to Microsoft Exchange, is a versatile collaboration tool helping enterprises, academia and government take advantage of their smart collaboration capabilities. In this era where having a good collaboration platform is turning out to be a competitive advantage, Open-Xchange is better positioned in the marketplace due to their open source philosophy.

I am a strong proponent of open source in cloud computing. Open source, along with open architecture, can play a major role in keeping the playing field leveled in the cloud computing marketplace. On the other hand, cloud computing, in general, and SaaS, in particular, can help open source vendors monetize their products. SaaS is turning out to be a great business model for open source vendors.

Open-Xchange realized this potential and started reaching out to SaaS providers with comprehensive solutions developed in partnership with top tier technology partners like Novell, Parallels, Red Hat, and Univention. Their Shared Hosting Edition and Appliance Edition are used by many service providers to offer SaaS solutions to their own customers. Such open source products help many traditional service providers to reposition themselves as SaaS providers due to the following advantages

• Low TCO of open source products helps these service providers offer SaaS offerings within the realm of cloud economics
• The permissive open source licenses gives them an opportunity to add features which help the service providers differentiate themselves from their competition

Recently, Open-Xchange partnered with Bull, the Paris based service provider, to offer Open-Xchange to German customers both as a SaaS version and, also, as a on-premise version. Today, Open-Xchange has announced its partnership with Germany based email security vendor, eleven, to offer spam, malware and anti-virus protection to users of Open-Xchange platform. These partnerships forged by Open-Xchange is going to help their SaaS clients to add value on top of their open-xchange based SaaS offerings in the future. For example, Bull Germany will add SaaS offerings such as anti-spam, anti-virus, backup and revision-secure e-mail archiving soon.

Looking at these developments, we can conclude that SaaS is proliferating into markets around the world due to the repositioning by the traditional IT service providers and telecoms. Open source is making this progression easier. More importantly, SaaS is giving a lease of life to many open source vendors who had difficulty monetizing their products.

Google Gears, a technology developed by Google to offer offline functionality for browser based SaaS applications, is officially dead. Google today announced that they are not developing Google Gears any more because they plan to push this offline functionality into HTML 5.

Once in the early days of SaaS, Google Gears was very attractive to many SaaS vendors. I even argued that it is a lifeline for SaaS. After the initial buzz died down, I was talking to many SaaS vendors and some of them mentioned that even though they don’t see significant use of Gears by their users, it was one of the things users were looking forward while evaluating SaaS applications for adoption. Eventually, the development of Gears slowed down.

In the mean time, Google got busy with developing Chrome browser. In January, they released a version of Chrome that had native support for database API similar to the one had by Gears along with APIs like Local Storage and Web Sockets. In fact, tech blogosphere was buzzing with talk about lack of interest on Google’s side for the development of Gears. Today’s announcement puts an end to any speculation firmly confirming that Google will eventually end support for Gears and focus more on getting the features inside HTML 5. 

Cloud Brokers are service providers who sit between the user and the cloud to offer additional value add on top of the cloud. The research firm Gartner lists

• adding services like security and management on top of the cloud
• aggregating the services of customers over many different cloud platforms
• arbitrage between the cloud services making the marketplace competitive

as three opportunities for Cloud Brokers. One such company is Rightscale, a California based company founded in 2006 and having launched close to 100K servers on the cloud. They are one of the largest Cloud Brokers helping companies of all size and shapes take advantage of the cloud. Rightscale already supports AWS, GoGrid, Flexiscale, Eucalyptus and Rackspace. They also support VMWare’s vCloud and announced plans to support Windows Azure. In my opinion, they are one of the most agile companies out there in the space and you can know this by just listening to their CEO, Michael Crandell, talk. His enthusiasm for Cloud Computing is truly infectious.

Yesterday, they announced Rightscale Social Gaming Edition to support companies building games on top of the social networks like Facebook, Myspace, etc.. Three of the biggest social gaming companies, Zynga, Crowdstar and Playfish, use Rightscale to manage their infrastructure on Amazon EC2. As a result, eight of the 12 most popular games on the Web today, with a total of over 77 million daily active users, run on RightScale, including FarmVille, Café World, Mafia Wars, FishVille, Happy Aquarium, Pet Society, PetVille, and Restaurant City.

Sensing an opportunity, Rightscale tweaked their management platform to support social gaming requirements and have announced the release of Rightscale Social Gaming Edition. This edition provides pre-configured gaming deployments with “Facebook-ready” services and, also, comes bundled with consulting services to help companies deploy and manage on the cloud with ease.

The basic configuration comes with a 6-server infrastructure including load-balancing, application, and database tiers. Once the application is either ported over or developed, it is extremely easy to autoscale and, even, rearchitect the setup for the exploding traffic. Another important addition to this edition is a dashboard that provides critical insight into the cost of each game through powerful real-time metrics. The cost of the basic version of Rightscale Gaming Edition is $3500 that comes bundled with 30,000 server management hours.

This release once again emphasizes how Cloud Brokers can add real value to the users and how important they are to the success of cloud computing. Rightscale, with their agile approach to the cloud business, are positioning themselves for the long grind.

Rackspace, the San Antanio based Cloud Infrastructure provider, announced on tuesday that their profits for the fourth quarter has surged by 32%, increasing from rom $6.8 million to $9 million. Rackspace, which was started in 1998, claims to have 70,000 customers now with over 51,000 cloud computing customers. Even though it is not clear how they arrived at this number, I would assume this includes a large chunk of Mosso customers, many of whom were from their shared hosting category. Even without any breakdown, it is easy to see the success of Rackspace’s cloud division. 

After establishing themselves as a leader of managed hosting with focus on fanatical support, the idea for Mosso was developed by two Rackspace employees inside a Wendy’s restaurant in 2004. They thought about the value of tapping into clustering, load-balancing, and virtualization. In 2005, the company adopted their vision and Mosso was born. In 2008, Rackspace announced the acquisition of Slicehost and Jungledisk software. Eventually, they expanded their product line as CloudSites, CloudServers and CloudFiles and rebranded under the name RackspaceCloud. They forged ahead in the cloud computing marketplace by releasing their API as Open Source and with a release of a marketplace in their ecosystem.

According to San Antonio Express News, the revenue from the RackspaceCloud is going grow further by 2012.

Cloud computing now accounts for roughly 9 percent of the company’s total revenue, but that’s expected to grow to about 14 percent this year, according to Tier 1 Research. By 2012, Tier 1 Research estimates Rackspace’s cloud computing business will generate $272 million in revenue.

This is good news for Rackspace and, definitely, a good news for the cloud providers. As businesses get more comfortable with the idea of cloud computing, we are going to see more and more adoption of public clouds. With Amazon Web Services having huge success, Rackspace and, now, Microsoft are well positioned to challenge Amazon.

Mobile platform is getting hotter and hotter for developers. After iPhone turned the user behavior of mobile devices upside down, a gold rush began for developers. The huge success of iPhone platform has made mobile very attractive for everyone from users to developers to, even, enterprises. The success of Android platform and the excitement created by Windows Mobile 7 have increased the opportunity in the mobile space. From the days of “there’s an app for that” Apple campaign, we have moved to an era of platforms where we can easily claim that “there’s is an app store for that”. Not to be outdone by mobile OS vendors, mobile operators from around the world had joined hands together to help developers create apps for devices on their network. Whether it is the Joint Innovation Lab spearheaded by Verizon, China Mobile, Vodafone and Softbank Mobile or the alliance announced yesterday by around 20 operators including AT&T, Sprint, Deutsche Telekom, Bharti Airtel, etc., these operators are hell bent upon having a thriving app ecosystem on their network. They clearly understand that such an ecosystem is vital for their very existence in the upcoming decade.

Alcatel-Lucent, a leader in mobile networking technologies, is already focusing on an application enablement strategy. They are using their leadership position on these technologies to help mobile network operators and application providers to offer apps without getting bogged down by the high network costs. They were acting as a network integrator to help these providers offer wide ranging applications to customers.

Today Alcatel-Lucent has announced a new developer platform on the cloud with game changing APIs that helps bring together developers, service providers and enterprises to build the applications for the future. Alcatel-Lucent have a clear vision about network being a platform for applications transcending mobile operators, devices and mobile operating systems. To make this vision a reality, they are taking an active role in empowering the developers by setting up a sandbox based on the cloud that offers the necessary tools for developers to build, test, manage and distribute applications across networks, including television, broadband Internet and mobile. With this platform, Alcatel-Lucent is acting as a bridge between service providers, enterprises and third party developers. This cloud based platform with open network based services allows service providers to securely expose their unique network APIs to more and more developers, helping them to take part in the application market gold rush.

Let us take a brief look at what this offers. Since I was out on the weekend, I missed an opportunity to get a briefing from the Alcatel-Lucent folks currently busy in Barcelona. But I managed to dig a little bit into the information that was available to me. Essentially this adds some additional tools, a virtual sandbox and a way to handle the entire application lifecycle to the Alcatel-Lucent Application Exposure Suite they announced late last year. Their API integration and bundling model is designed in such a way that it helps developers to monetize seamlessly like the service providers and enterprises by bundling a revenue sharing approach. This model also offers the developers a smart API bundles for application creation by putting together two or more APIs/web services. The advantage of this approach is that it doesn’t require the upfront API feels which was acting as a deterrent for many developers. The fact that this model embraces the Open API philosophy announced by the company earlier, makes it even more attractive for developers.

To support the adoption of the API bundle model, Alcatel-Lucent also unveiled two new developer tools — a virtual sandbox and a dashboard. 

The Virtual Sandbox provides developers with a comprehensive environment in which they can simulate, test and verify new applications across service provider networks for delivery across a wide range of platforms.  Developed through Alcatel-Lucent’s extensive engagement with customers worldwide, the Virtual Sandbox helps provide a scalable and  comprehensive testing ground to accelerate development, distribution and deployment of new services.

The Dashboard offers developers real-time business analysis of application activity, API statistics, costs and the revenue potential of applications.  Using the dashboard, developers can explore the various business model options associated with a given service and make an educated determination about its relative value and revenue potential before committing significant time or expense to creating the application.  It also can be used to track the success metrics of an application over time

Mobile platform is very crucial for the very success of cloud computing. The mobile applications are going to be the biggest driver of cloud adoption. By taking the network as a platform approach, Alacatel-Lucent is positioning itself to be a dominant driver of this shift. It will be interesting to see how all these efforts from companies like Alcatel-Lucent to network operators to OS vendors like Apple, Google, Microsoft, etc. are going to shape up the industry in the coming decade. Pretty exciting times are ahead in the mobile market and, also, in the cloud computing space.