Yahoo has formed a Cloud Computing & Data Infrastructure Group, to explore getting into the business of selling pay-as-you-go cloud infrastructure to developers and companies. Yahoo has been building massive scale infrastructure for years, but the intent of the new organization is to streamline development by bringing the various people and teams working on the core technologies into a single group, said Yahoo CTO Ari Balogh said to Dan Farber.
In order to expand its cloud computing capabilities, the Company will form a Cloud Computing & Data Infrastructure Group, charged with developing a computing infrastructure that balances scalability with cost effectiveness. It will move all consumer-facing platform teams to the Audience Technology Group, led by Venkat Panchapakesan. In addition, it is putting new leadership in place behind Yahoo!'s search group, naming Prabhakar Raghavan to direct search strategy and Tuoc Luong as the interim leader of the search product team. Both Prabhakar and Tuoc will also continue in their roles as the leaders of Yahoo! Research and Search Engineering respectively. In addition, David Ku will lead the Advertising Technology Group within Search.
In an interview with the Financial Times Microsoft CEO Steve Ballmer gives credit to Google for seeing the potential of search and innovating in search. Ballmer admits:
1. Microsoft didn't see the business model for search. 2. The five year development cycle of Windows partly to blame. 3. Online represents a huge opportunity for Microsoft. 4. Live Cashback is not a strategy to buy market share. 5. Cloud computing and world’s media moving online. 6. Google is a single product company.
Here is the interview transcript.
FINANCIAL TIMES: So, you finally got rid of that other guy. Now we want to know what you’re going to do. STEVE BALLMER: Onward and upward, baby. Onward and upward.
FT: What does it mean to lose Bill Gates from his full-time role? MR BALLMER: Well, in a way you lose a talent like Bill, you lose a talent like Bill. But the culture of the place is built on a lot of things. It’s not just built on the leaders; it’s built on the leaders and the experiences that we’ve had, and the successes and the failures. At some point it’s not what leaders say, it’s the accumulation of sort of direction and experiences, successes and failures. The culture builds up itself.
I think his legacy will sustain itself, the kinds of things, you know, Bill values - intelligence and intensity. I don’t think Bill going away actually will detract from the culture. I’ve seen this at Wal-Mart. I mean, Sam Walton has been gone now quite a while, and yet the culture lives on in many ways. So, I don’t really think that’s a very big deal at all.
FT: How have you prepared personally for this? MR BALLMER: [In college] we had to read some passages from [Max] Weber on the routinisation of charisma, talking about how governments in this case primarily move on and transition after a charismatic leader. So, you could say I’ve thought a little bit, and I picked it up and dusted it back off and looked at it. The truth of the matter is the important thing is to point forward and to keep people pointed forward. This is a funny transition, because - how do I say this the right way? Bill started the company, but for the people in the company it’s as much my company almost as it is Bill’s, in a sense. So, it’s not like we’re passing it to let me call it a second generation. I feel relatively first generation, let me say it that way, to our employees. I’m not Bill, but I have some of that first generation fairy dust sprinkled over me, so to speak.
FT: Microsoft’s share price hasn’t done much for years. Why not? MR BALLMER: Well, I think in general we’re not that inconsistent with most large cap stocks. [Also,] for all companies there is a period in which your stock is priced very high on the expectation of growth, and then you go through a period where you’re in “show me,” you’re going to do that growth. This is what the market is supposed to do, it’s supposed to bid your price up in advance of profit, if it thinks you’re going to have them, and then it holds on for a while until you can surprise the market with yet another surge beyond expectations.
So, I think we have grown into what people expected of us in the late ’90s, and now people are trying to decide what do they expect of us, and that gets down to essentially three or four key questions. Are we going to stay strong in the businesses where we have established ourselves? Are we going to be able to move into big, new businesses like online, TV, and phone? Are we going to continue to drive [the] enterprise business, because I think that’s a sleeper for many people, it’s been the thing that’s really propelled a lot of our growth over the last several years, and are we going to be able to get emerging markets really figured out with the high software piracy there?
You know, our share price was sort of on a different trajectory. Then we announced our bid for Yahoo, and that kind of changed the trajectory a little bit. As investors try to think, how are they going to succeed in online, what kind of investment is going to be required, how much value can they create, I feel very good about our prospects. Certainly I feel very good about our results. We’ve out-performed most of our industry in terms of profit growth over the last five years.
FT: The Yahoo bid was taken partly as a tacit admission that you needed to do something fairly radical. Was that a fair response? MR BALLMER: No, it’s inaccurate. It may be fair; I can’t comment as to fair. In a sense online is our best deal, isn’t it? We’re small; the other guys are big. There’s a market out there. We have only one way to go, and it’s up, baby, up, up, up, up, up!
We thought we could accelerate the upside in a way that was value-creating. At the end of the day, Yahoo was not an online strategy. It was a way for us to accelerate our own online strategy. They didn’t want to sell. We were relatively disciplined about the financials You know, it’s funny, because we’re founders, I think [shareholders] wonder whether we really care about creating shareholder value, and yet I think we were far more disciplined than 95 out of 100 companies would be.
FT: What lessons are there from Microsoft’s late move into search? MR BALLMER: I think we have to keep agile. I do fault us for the speed with which we dove into search, primarily because we didn’t see the business model. And I give Google credit for innovating in the business model around search. They did a nice job on that, and that’s why they won.
I think one of the mistakes we made, and I think we’ve said this before, is having a five-year gap between Windows releases did calcify our ability to react to anything, because there was a five-year window basically where a big part of our R&D resources were fairly locked in. It doesn’t mean everything should be a six-month cycle, I don’t believe in that, but we’ve got to have more flexibility in our R&D commitments than that.
FT: How do you deal with search now? MR BALLMER: I think we have three things we’ve got to do. There are some things that we just have to, as we say, ante up to be in the game: relevance, cap-ex, responsiveness. There are areas in which we’re going to differentiate and make Google play catch-up. And then there are areas in which we’re trying to change the rules. I think Google is going to have to decide whether they want to come with us. If this Live Cashback thing is successful, they’re going to have to decide if they want to play the game or not. [Note: Microsoft’s Live Cashback service, announced last month, pays a rebate to internet users if they make a purchase after finding an online merchant through a Microsoft’s search engine.]
FT: Is Live Cashback a way to buy market share? MR BALLMER: No. Well, I don’t know. If somebody else comes out with a product and says my product is better and cheaper, is that buying market share because they made the thing cheaper? That’s all we’ve really done here.
Search looks free, but, of course, search isn’t really free. It’s not free to the advertisers. So, what we’ve said is we’re going to change the way the money gets divided. In today’s world the search provider basically keeps everything, and we’ve said, look, we’re going to share that money differently, some to the advertiser, some to the user, and some to us. Is that buying market share? I think that’s called reinventing the business model in a way that makes the business more competitive, and we’ll see if it works or if it doesn’t.
I’ve got to tell you, in every - other than the battle with Open Source, every other competitor, I love being able to come into a room and saying we’re better and we’re cheaper. We’re going to try to say we’re better and we’re cheaper basically. I don’t think this is sort of the end of the story by any stretch of the imagination, but I think it tells you we’re going to do things a little differently.
We’re going to have to climb up one [market] share point at a time, one innovation at a time. I don’t think this is something that changes, flips overnight.
FT: Why hasn’t that approach worked so far? You’ve been at it for some time. MR BALLMER: No, no, we’ve been building up the basic ante primarily. We had no search engine and we had no paid search engine. We had to build. Then we had to get one round of feedback on where we weren’t up to snuff. Then we had to start tactical differentiation. Now we’re starting some business model differentiation. We’ve got some UI innovation.
You know, the world isn’t very smart about technology businesses in the sense of thinking they move super quickly. Things do move quickly, there’s no question, but generally at the end of the day you have to be fairly patient and persistent with innovation in order for it to beak through.
FT: A lot of people are now saying Yahoo was Web 1.0 and would have been difficult to do, and you should instead be looking at the next thing - Facebook or social networking, whatever comes after that. MR BALLMER: I think people don’t understand what they’re talking about. At the end of the day, this is about the ad platform. This is not about just any one of the applications. The most important application for the foreseeable future is search. It’s where you start things. It’s where you express intent. It is important.
I don’t think we can say, okay, well, we’re going to be in the ad platform business, and we’re going to do it just on the strength of non-search based assets. We have to be in the ad business, and we’ve got to have a good chunk. We don’t have to dominate, but we’d better have a darn good chunk of the search market over time, and we’re working away at it.
FT: How long are you going to do this job for? MR BALLMER: I’ve told everybody I think I’d like to do it until my youngest goes to college, which would be nine years from now. I mean, it might wind up less, the board might not want me here, but that’s kind of my life planning horizon.
FT: How do you want to be judged? What goals have you set yourself for that period? MR BALLMER: I set two kinds of goals: innovation goals, and what I’ll call relative goals.
The relative goals: I’d like to see our company increase its share of profit from all companies who have software as a core capability. I’d like to see us increase our share of the pool. What we are is we’re a software innovation machine. We can turn that machine and apply it in different places. We’re not just a desktop company or an enterprise company; we’re an online company, we’re a software embedded in devices company. And we should be able to outgrow the rest of them.
We’re not going to do that without the right innovation. [That] rolls up into five or six big themes. How do you redefine the way people interact with technology, big screen, little screen, medium-sized screen? How do you redefine the user experience and redefine the definition of how these devices relate to each other? We’ve got some big ideas in that area. I’d like to get those accomplished in the next nine years.
All of the world’s media advertising communications is moving online. I would love to be the company that does the best job at helping people put information online, create new forms of information and communication for that online world, and then that helps people - helps businesses monetise them and consumers consume them.
[We’re] going to move to a world in which more and more of computing is done in the cloud as opposed to corporate datacentres We’ve got a big initiative about transforming essentially enterprise computing and taking costs and complexity out of that.
Last but not least, the ability to let people not only get at information but then to analyse it and use it, we’re already talking about this some in the context of consumer search. We say it’s not really about search; it’s about the task. How do I find and act, find and analyse, find and get insight. I think we haven’t even scratched the surface of innovation in that area.
FT: What sets Microsoft apart as it pursues all these things? MR BALLMER: I think we’re the only company in our industry that’s got any track record of persistence. Some companies get it right once. We’ve gotten it right twice, because we stay after it.
FT: Is that he core attribute of this company, persistence? MR BALLMER: I think our long term - I’d call it our long term approach, which is a combination of taking on bold challenges, being patient, being persistent, being relentless. There’s an accountability and in some senses you’ve got to be relentlessly accountable and you also have to be willing to stick with things. We don’t pull back; it’s not what we do.
Sometimes we get shareholders who will question us on that, but I think it’s our great strength. It’s what built Windows, it’s what build Office, it’s what built our enterprise business, and what’s going to let us build the search business. It’s what letting us build a TV business.
FT: Have you learned anything from competing with Google, for instance their speed? MR BALLMER: I haven’t seen speed out of Google really. I mean, come on. They have one product. It’s been the same for five years - and they have Gmail now, but they have one product that makes all their money, and it hasn’t changed in five years.
I mean, they have a gestalt, but gestalt is gestalt. Let’s talk about the reality. The reality is one product makes 98 percent of all of their money, search. Oh, they have two products, AdWords and AdSense. They have two products, both search-based, that make all of their money, and it hasn’t changed a lot in five years. I’m not giving them a hard time, but we’ve got to learn - if you say, what have you learned, we try to learn from people’s successes, not from people’s gestalt. The gestalt is yet to be proven.
Keeping up with the lingo alone has become a challenge as changes in the global computing infrastructure bring an entirely new approach to managing both enterprise and personal computing.
Writing over at SOA World, Michael Sheehan has a great piece comparing the differences and similarities of Grid, Cloud, and Utility Computing - terms that are often used interchangeably and in different ways.
There seems to be a lot of debate as to what Grid computing really is. In fact, the blogosphere seems to be throwing around terms like Grid, Cloud, Utility, Distributed and Cluster computing almost interchangeably. And rather than clarifying things, I feel that the waters are just getting muddier.
Surprisingly, he suggests that the term "cloud computing" is on it's way out because it is too ambiguous where I'd suggest this concept is appealing partly becuase it is vague, and more importantly has enough catchy buzz that the term "cloud computing" will actually come to replace all the others, with distinctions made after vendors have offered a "cloud computing model" to customers.
Cloud computing has become a somewhat ambiguous term that can mean several things. However clearly "the cloud" is growing in significance as many businesses small and large are moving all or part of their computing infrastructures off of their local servers and local networks and starting to do much of their business online. Websites and online stores were often managed with remote servers using the internet as "the network", but increasingly companies are sending tasks like email, document collaboration, database management, and project management into the cloud rather than managing them on their own servers using their own IT staff.
The New York Times has a good story today about the cloud, and how a company called Animoto has very effectively used cloud computing to create a very robust infrastructure without building their own data centers.
Although one rarely thinks of Las Vegas as a technology powerhouse, a secretive company called Switch is trying to change that as it works to become one of the key global infrastructure components.
Accounts say that Switch was originally built as part of the Enron Empire, and Enron's collapse allowed the purchase of the massive and expensive internet technology behind Swich to be sold at a fraction of original costs, opening the door for investors and Switch's CEO Rob Roy to become a key player - perhaps eventually even *the* key player, in global internet infrastructure.
As cloud computing becomes mainstream computing for many businesses and even several huge enterprise deployments, the critical importantance expands for the huge data centers run by giants like Google, Amazon, Yahoo, Microsoft, and Las Vegas' new kid on the block, Switch.
Ashlee Vance of The Register notes that early secrecy about the project is giving way to the needs of branding switch as the global internet giant it wants to become:
.... drawing undue attention to this facility would go against the military customers' best wishes. There are rooms at the Switch facility that require top secret clearance, preventing even Roy from entering them ...
In the next couple of months, Switch will open a new facility located just a few miles from the McCarran International Airport called the SuperNAP. Roy describes the 407,000 square foot facility as the most energy efficient, tightly packed data center on the planet. He expects it to be filled by the world's most prominent companies, including just about every technology heavyweight you can think of and the major media conglomerates. The SuperNAP monstrosity looks to stand as just a starting point for Switch with the company's investors urging it to build close to 10 similar centers around the globe.
Google gave the cloud computing initiative a major boost today by launching Google App Engine. Web developers can build and run their web applications on the Google infrastructure. The goal is to make it easy to get started with a new web app, and then make it easy to scale when that app reaches the point where it's receiving significant traffic and has millions of users.
The service is similar to Amazon Simple DB and SalesForce App Exchange where developers can online demand applications or SaaS applications. Google App Engine gives developers access to the same building blocks that Google uses for its own applications, making it easier to build an application that runs reliably, even under heavy load and with large amounts of data.
Dynamic webserving, with full support of common web technologies
Persistent storage (powered by Bigtable and GFS with queries, sorting, and transactions)
Automatic scaling and load balancing
Google APIs for authenticating users and sending email
Fully featured local development environment
Google App Engine packages these building blocks and takes care of the infrastructure stack, leaving developers more time to focus on writing code and improving your application.
HP is rolling out a new service to move file storage from your computer to the internet. HP Upline is the company's take on cloud computing where data and applications are stored in the internet cloud versus locally. The service will provide unlimited storage to SMEs, home offices, and end consumers. Plans start at $59 to $299 per year for storing, sharing, and backing up files. A free, basic, and limited service is also available.
Google has announced that it will be enabling offline access to Google Docs. The planned rollout is expected to happen over the next couple of weeks. Powered by Google Gears - which once enabled, provides the user with a local version of their documents and a list of documents and editors. Features are limited offline; users are able to view and edit. Changes are made via a web browser even when offline and saved locally and when back online, documents are sync'd back up with the server. Offline access is only being provided for docs initially, not spreadsheets and presentations.
Om Malik has a piece today detailing his discussion Microsoft's future with Ray Ozzie, one of microsoft's key players and probably the key architect of overall online strategies for Microsoft.
Microsoft is in a difficult business position now as many applications and many major online projects are moving off of desktops and local servers and into cloud computing services such as that offered by Amazon.com, which Ozzie compliments as the first major effort in the utility computing space.
Microsoft appears to be moving powerfully into cloud computing, though it was also notable at this year's Computer Electronics Show (CES) that Microsoft was also advertising the "home servers" as a small business solution.
To date, Microsoft's internet success stories are few and far between, and they are watching Google eat and serve a lot of free lunches. As the competition heats up with the likely merger of Microsoft and Yahoo, a lot of change could happen very fast.
Harper's Magazine featured story "Keyword Evil: Google's addiction to cheap electricity" is about Google's infrastructure buildup in Oregon's Columbia River and how it has triggered an arms race. Microsoft, Yahoo and Ask are also building data centers on the Columbia River. As they compete to offer software, music and movies over the web in the coming era of of "Cloud Computing." Among other details, it points out that the plant is expected to use 103 megawatts of electricity by 2011 or enough to power a city the size of Tacoma. More>>
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authors and not WebGuild's.
Yahoo has formed a Cloud Computing & Data Infrastructure Group, to explore getting into the business of selling pay-as-you-go cloud infrastructure to developers and companies. Yahoo has been building massive scale infrastructure for years, but the intent of the new organization is to streamline development by bringing the various people and teams working on the core technologies into a single group, said Yahoo CTO Ari Balogh said to Dan Farber.
In an 
Google gave the cloud computing initiative a major boost 
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