Sun CTO Predicts Internet Consolidation Endgame

Romerican writes "C|Net is running an interview with Greg Papadopoulos, CTO of Sun Microsystems, about the Very Near Future where he essential sees the Internet as no longer competitive. He has blogged his belief that the end game is here and nothing is likely to unseat the new world order." From the C|Net article: "It's called software as a service. It really is the running of what we think of as IT through the network. You don't buy software, you buy the consequence of the software. That starts with the small and medium enterprises. eBay, in my mind, is the leading example of small businesses being absorbed by services. Anybody who clicks their store on eBay is in fact consuming a service. They are contributing to a larger-scale eBay rather than them buying some server and sticking it on their desk."

Comments

Erm ...

[B3ryllium]

History shows that the majority of "consolidation" will eventually unwind, fragment, and finally return to something similar to the original way of doing things.

And then it will happen again.

Witness: Mainframe computing to Personal Computing to Thin Client Computing.

Re:Erm ...

[sugarman]

On a long enough timeline, we're all dead. But being able to recognize an emerging trend and capitalize on it in the near future of a 5-10 year plan can be critical to a business.

Characterizing it as an "endgame" may be a extreme, but consolidation of the big players is continuing for the forseeable future.

--sugarman--

Re:Erm ...

[inKubus]

Yeah, but you get the feeling consolidation is what he WANTS, not necessarily what's going to happen. I think a lot of small businesses don't like eBay, which has become a bastion of SE Asian importers and crooks for most commodity items. Sure, you can still find some decent categories that aren't flooded with .01 cent starting bids for trinkets but they are few and far between. The small businessperson innovator is going to go his own way and not follow the crowd any more than possible. There will always be crowd-followers, and that's who Sun will cater to if that's their strategy. But to get the big growth, you need to find the innovators, and those people are not always going to subscribe to the service model. They just don't trust anyone else to do the job right.

i like the server in my server room

[WeAreAllDoomed]

i don't want my company data on someone else's servers.

unless "services" address this, there will be resistance. maybe not if you're buying used stuff at estate sales and selling it on ebay, but...

Re:i like the server in my server room

[Sivaram_Velauthapill]

There will certainly be resistanc but I think you will change your mind when:

(i) costs decline to make it attractive to you (if your $200,000 costs can be cut to $75,000, wouldn't you? (I'm just making up #s))
, or (ii) it becomes so easy and ubiquitous that you would be worse off to do it the old way (an example would be webmail versus desktop client email from an ISP)

How many people nowadays use Gmail, Hotmail, or what-have-you for their personal and confidential e-mail? At one time, many would have said that they would not trust a "free email provider" for their email... In the corporate world, the best example is perhaps salesforce.com. So many companies are actually trusting their critical sales data to this online outfit. Given that many organizations treat their sales data as even more secretive and precious than R&D or employee personal data, you would think that no one would use salesforce.com. Yet it's happening and it will only grow... or how many people are willing to provide a whole hoard of personal information about them and their company when booking flights online or hotels...

In a crude sense, already your data is on someone else's servers. For instance, many organizations (not the large corporations but certainly many mid-sized and smaller companies) store their data on their ISP's or some 3rd party IT company's servers. Many don't even know that htey are doing this (cuz many in management don't really understand a lot of tech stuff and most of it is transparent anyway (only a techie can tell the difference between a file server in your building vs one 100km from you)). From a business point of view, a lot of the tech infrastructure in non-tech firms (i.e. I'm talking about a general business whose core competency is not tech) are costs that the business would love to get rid of.

A lot of people may hate Microsoft here but let's face it, MS' view of web services is taking off. It's just too bad for them that companies like Google are taking a big chunk of the market. Ebay is nothing compared to "web maps" (maps at Google or MSN or whatever) and their potential.

Re:i like the server in my server room

[penix1]

"How about a software subscription service where you own the server and the data stays on your hard drive, but the software is on a network filesystem?"

It still won't work for many reasons. First, it requires an "always on" broadband network connection that far too many people don't have and feel they don't need. Second, the security risk is too high. Too many of these companies will sell whatever isn't nailed down especially your data. Even though you may retain a copy of your data locally, nothing is stopping these companies from also keeping a copy on their server. Third, people don't like to rent what they feel they should own. Ownership is a big part of human behavior that can't be ignored. Just ask the **AA about it. Lastly, it has been tried many times in the past with disastrous results. If this guy can't learn from the past, he is doomed to repeat the same mistakes.

B.

Re:i like the server in my server room

[spun]

First: there is no reason that your servers could notn cache the software. Second, the security risk is no higher than with traditional software. Reputable companies will sign contracts stating they won't use your data. Nothing is stopping any software company from sending your personal data to their server, except they would have their asses handed to them in a court of law if anyone sued them. Third, what with support contracts and upgrades, people are in effect renting software now. Most people don't care or even really understand the difference between owning intellectual "property" and renting or licensing it. Finally, there were insurmountable bandwidth issues that kept this from working in the past.

Personally, I would never rent software I used at home. But then, I would never lease a car either. I hear many people, and especially corporations, do lease cars if it makes financial sense for them. I imagine leased software would make sense in some situations, too. Think about it: you have a little startup and you want a nice integrated CRM, HR and accounting package. You can shell out $100,000 upfront for the package with the functionality you want and still pay $1,000/month in support, or you can lease the package, support included, for $2,000 per month. Which would you pick?

Will leased software ever completely replace owned software, as this Sun wingnut predicts? In his greedy wet dreams, maybe. But it will become a larger part of the total software landscape than it is now.

that is all good and well.... but

[zappepcs]

someone needs to remind him of the little 'botnet' problem that is currently going around. Sure, pan global networks are a good thing, and will bring us good thing... BUT the only thing they are bringing us right now is SPAM, SPAM, and more SPAM.

Sure, there is Google and eBay et al, but look at the reality of things... all that really needs to happen to stop the world is for 2 of those 5 computers to be infested with spam spewing botnets.

I think that the world is as ready as I am for that to happen... lets just shelve this cute idea before the botnet owners get word of it

"You don't buy software..."

[Recovering Hater]

That's right. I download it for free. :P

Welcome to the industry, Greg Pramanamana...

[xxxJonBoyxxx]

You don't buy software, you buy the consequence of the software.

Welcome to the industry, Greg Pramanamana. In the great game of IT sales, the men will tell you that it's always been about pitching benefits (what you call "consequences"). What you actually close with doesn't really matter. Over time the deliverables have almost always been a combination of hardware, software and services; the mix may change over time but the mix will change again when someone's pricing model makes the alternatives look attractive again.

Re:Welcome to the industry, Greg Pramanamana...

[OECD]

...the mix will change again when someone's pricing model makes the alternatives look attractive again.

Or they remember to factor things like data vulnerability into their pricing model.

Re:sigh

[inviolet]

Sun and others have been predicting this ("the network is the computer") for about a decade. Nothing significant has changed, except for the presence of broadband. It remains a stupid idea.

Do you recall that "the network is the computer" idea required ubiquitous broadband?

Only now, and over the next few years, is the idea even practical. So hold your horses, and watch.

re: "The Network is the Computer"

[King_TJ]

I agree! Ever since I first heard Sun use that slogan, I thought it was dumb. If you ask me, "The Network is FOR the Computer" - and that's all there is to it!

All of these large corporations (IBM, Sun, Microsoft, etc.) envision making a fortune by renting you your software (by serving it to you over the Internet). Like everything else in life though, you've got a LARGE number of folks who'd much rather own than rent. Renting has historically only made sense in the short-term, usually as a "stop gap" measure. You rent a car for a weekend trip, or because the car you own is in the shop for major repairs. You rent an apartment or house because you need someplace to stay, but you aren't in a position, financially, where you can buy a house yet. You likely rent furniture or appliances from a "rent a center" type of establishment because you want to live above your means, and don't have the patience to save up to buy it. So tell me again why I'd want to continuously RENT my applications rather then buy software licenses and install/run the stuff on my OWN equipment?

The Internet no longer competitive?

[Doctor Memory]

What, exactly, is the internet's competition? Internet II? Minitel? I notice that no-one's offering me a discount to switch from using the internet to "MegaCorp's NEW ULTRAnet! (now with 30% more fiber!)".

Also in the future...

[silentounce]

He later when on to say that in the future "no one will own cars because the public transportation system will be so good. Also, private property will be consolidated and we will live in communes so as to provide cheaper maintenance. I mean, who wants to mow their own lawn."
 
He even went so far as to say that the concept of marriage will soon be dead. "In the future, everyone will frequent brothels. Anybody who fucks a whore is in fact consuming a service. They are contributing to a larger-scale brothel rather than them marrying some broad and sticking her in a house. I mean, why buy the cow when you can get the milk for cheap?"

Don't be so sure

[RingDev]

I was thinking the same thing when I first read this. I want to own and operate my own software. But then I looked at my online usage.

I play WoW. Yeah I bought the software, but the software is worthless with out the online services.

I use Vent. Free software, guild pays for services.

I use hotmail. I don't even have an email client installed at home.

I could go from example to example of how online services have replaced many of my digital and non-digital based activities.

Online services will never be an absolute. For example, online word processors; they will likely do wonderfully in integrated solutions, but I doubt people would start going to www.MSWord.com to write their papers when they can have Word installed locally. To be honest, you'll be hard pressed to move people from desktop Office to just about anything because it is a rock solid application. Heck MS's primary competition for Office 2k7 is still Office 2k! If MS can't get users to upgrade, how is some pay-for-service online tool going to do it?

Anyway, the article might be a bit sensational (surprise!) but it is not with out merritt.

-Rick

Wishful thinking?

[eln]

Every software company out there wants "software as a service" to become the New World Order because it represents the Holy Grail: a reliable continuous revenue stream from existing customers.

When you sell software, you get a one-time payment that may or may not ever be repeated. When you sell software as a service, you get continuous revenue. This is what every software company wants. The question is, is this what the client wants.

Enterprise software companies are making a huge push into this space, but I'm still not convinced that the market for it is big enough, at least not yet. For software as a service to work, the client needs to trust its vendor far more than they do now, because not only are they trusting the vendor to provide them a piece of software, they're also trusting the vendor to handle the bulk of their IT functions as well.

This may be desirable for some companies, but I think the vendors are vastly overestimating the market because they want to believe EVERYONE will jump at the chance to hand over control to the vendor.

Obviously, there are some advantages for the client as well, such as being able to do things like true Disaster Recovery, and being able to sit in state of the art data centers and have real backup solutions, things that may cost far more if they wanted to implement them on their own. Even so, I just can't shake the feeling that the size of this market is more fantasy than reality at this point.

Re:Wishful thinking?

[slackmaster2000]

I'm not sure I agree with you. In consumer land, yes, purchasing software is often a one-time thing as you may decide never to purchase an upgraded version. Often times this is no big deal, you switch from Graphics Program A to Graphics Program B, woopee.

However, in the corporate world it's a bit different. The box on a shelf model of purchasing software doesn't apply so much. We purchase software and then pay for it yearly under expensive maintenance contracts. After years of using a software package, it becomes extremely difficult to even think about switching to another program and migrating data, re-implementing customizations, training, etc.

Even simpler software is moving to this model. Take Microsoft Office, which is no longer upgradeable by open license customers. In order to receive upgrade benefits, we have to purchase Software Assurance, which puts us in an interesting bind: right now we use Microsoft Office, but will we switch in the next three years? Maybe we will, but if we don't, then we will eventually wind up purchasing new licenses at full price. Thus if moving to a new office suite isn't a huge priority in the organization, it makes more sense to just pay the SA with the assumption that you'll still want MS Office and want to "save" some money. Customer lock-in. (I also wouldn't necessarily consider office suites to be simple these days either; when you've got tens of thousands of documents of all sorts, all created by Software X, it becomes harder and harder to justify switching)

So these companies supplying software to businesses already have a continuous revenue stream.

What I see holding back this software as a service thing in the present and near future is:

1) Yes there are potential cost savings after what could be a massive expenditure in moving to the new service. But do we really care enough to disrupt the current system? Is the reduction in IT overhead that significant? Over what timeline? Do we trust that technology won't change significantly during that timeline and not at all jive with our expectations? And just how portable do we need to be?

2) Do the applications work as well as local applications? Is the user experience equal or better? I've never seen this to be the case, but I can't predict the future. What happens when I *don't* want to upgrade the software features?

3) Customizing software is a common thing; yes, even in the non-opensource world. What happens when I want to add a feature, or a customized report (with or without the reporting tool provided by the software)? What happens when I want to link this application's data to that application? Am I provided these mechanisms?

4) We've all done the leased server and collocation thing. How'd that work out compared to admining your local servers? Nobody likes that out of control feeling.

4.1) We know what our in-house servers are doing. We can see them. We know what's on them. We know our internal network topology. We can maintain that, and would have to regardless. We get alarmed when something is wrong. We are confident that we can fix it without screwing anything up. We are completely responsible for all data and applications, and can choose exactly how they should work in the organization.

So IMO much of this depends on the quality of the software service, and how similar it is to a local deployment. If it isn't some web-based thing, or some Java-based thing, and the users and IT staff can both have the same power over the software as they previously had, then yay. I suppose if the applications just shot down the pipe to your machine when you wanted them, then it could work great... but why add the pipe into the mix of crap that can go wrong? Is it really that difficult to deploy and update software? I don't personally think so.

The views expressed in the article seem to have a very narrow scope. Some of them are valid for retail/online business, definitely. What about businesses that have absolutely nothing in co

Missing the forest

[BeBoxer]

From the blog:

Of course there are many, many more service providers but they will almost all go the way of YouTube; they'll get eaten by one of the majors.

The faulty logic here is that it presumes that new independent service providers aren't sprouting up every day. He sees the big trees in the forest, but misses the seeds and sprouts. Maybe that's just because the little guys don't buy pricy Sun hardware, so Sun doesn't see them. But they are there. I have no doubt that for every one web site that gets bought up by the big guys there are many more which don't.

What I see is that the Internet is an exceptionally fertile ground for seeds to sprout in. The existence of large companies such as Yahoo and Google doesn't change that. His comparison to the energy sector is flawed. The ease with which somebody can start up a new web site (sorry, "service provider") is in no way comparable to what it takes to start a new energy provider. Not even close.

It's this kind of nonsense which makes me wonder about the long term viability of Sun. It's no secret that cheap commodity boxes are eating them from the bottom up. So he spins this fairly tale about how all the small web sites (which don't run on Sun hardware) will simply cease to exist leaving only the mega sites (which do buy Sun hardware). Let me know how that works out for you.

And then there were two

[wheatking]

""Let's see, the Google grid is one. Microsoft's live.com is two. Yahoo!, Amazon.com, eBay, Salesforce.com "" Let us see... Yahoo is the new AOL so they are out. salesforce will be amalgamated in to Oracle and become the SaaS arm of whatever shape the whole oracle/siebel/SAP side of legacy software looks like Amazon will stay in the game (see mturk for relevance), and eBay may yet survive. That leaves three and possible 2 since amazon+ebay would make a good combo. so there. > go Frank.

Services absorbed by housing

[Denial93]

Gabbad the shaman, in a talk given today, announced that more and more service were absorbed by housing. "Look at the leatherer over there - he has abandoned his own tent and started using a house for his work. Likewise, the shepherds down south have given up the freedom of their own pastures and moved into houses at least over the winter. This means they aren't craftsmen anymore, they are sort of sub-services of housing. While there certainly are incentives for this trend, we should understand we are becoming dangerously dependent on the providers of housing. Masons and carpenters are monopolizing our economy!"

The shaman went on to warn: "If this trend continues, at some point there could be no craftsmen living outside of houses anymore! It is obvious this would be a great loss to our culture and society!"

eBay is NOT software...

[szelus]

Argument about eBay misses a point.
I don't believe anybody that sells on eBay is there because of a few scripts. They are there because of the buyers that search this site. Indeed, it's the unique marketplace, and marketplace was always a service. The fact, that eBay is a virtual one changes nothing.

What a Fucking Idiot!

[eno2001]

Software as a service? Yeah... I'm sure we're all going to want to be running Photoshop via the net and trust our precious photos to a third party. I can only agree to a point which is that each family or household should have an expandable central computer that can be scaled to the family. It would provide vital services that each family needs: web server, mail server, VPN server, file server, print server, time server, etc... Families should then be able to interconnect those machines via a LAN-to-LAN VPN system. And of course it should use friendly names that Joe and Jane Average can relate to. Do away with "central server" and call it a "FamilyNet Appliance" or some such claptrap. "Aunt Mary and Uncle John just got a FamilyNet box! Let's link them up the next time they come over. Aunt Mary said that she will bring the Trustcard (a flash device that stores and exchanges encryption keys between trusted machines along with IP info. Static IPs would be required for FamilyNet boxes.) with her so that their system will connect to ours. THAT gives the power to the end-user and not businesses. I don't know about you, but I don't even trust my e-mail to anyone but myself. I run my own mail server. I have ever since an ISP took my account of five years and gave it to someone else when they bought my old ISP and pretty much screwed every high-end customer over.

I think the Sun CTO's predictions also overlook what it is that people actually do with their computers. He's looking at it from completely the wrong angle: business application, specifically e-commerce. The majority of people use their computers for recreational and creative purposes. Sure, you have things like Youtube and MySpace that are all the rage right now, but they are merely distribution points. They aren't actual tools. TO put a video up on Youtube requires that you have a video camera, video capture capabilities on your PC or Mac, and ideally editing software plus all the associated tools to create the content. This is what people WANT. Until we all have 10 gigabit links to the internet and latency is sufficiently low, I don't think that content production tools are suited for network publishing over the internet (aka Software as a Service). This guy's head is up his ass in my opinion.

Re:What a Fucking Idiot!

[ffejie]

My main server probably costs no more than $2 maybe $5 a month to run 24/7.

How do you figure? Maybe my math is wrong.

300W x 24 hours / day x 30 days / month = 216kW-hours per month

In my area, a kW-hour costs about 14 cents. But, lets say you live in CA where I understand electricity runs about 12 cents/kWh.

216kWh / month x 0.12 $ / kWh = $25.92 / month.

Looks like you might be running up a bigger bill than you think.

The net connection where I am has only gone down twice in nearly four years and this was only due to planned moves.

Seriously? I have to get me one of those, mine is down at least once a month, until I reboot the modem. Also, we generally have cable outages 6-8 times a year for an extended period (2-10 hours). Who provides your internet service?

Cost of good data

[plopez]

(i) costs decline to make it attractive to you (if your $200,000 costs can be cut to $75,000, wouldn't you?
NO. Here's why:

I currently work for a SME of approx. 120 employees, sales in the 75-100 million dollar range.

About 3 years ago I was told that we had 12-15 million dollars of data in our databases. Based on the cost of collecting and maintaing the data (lots of engineering field data). In the past few years we have doubled in size both in employees and in database size, so let's call it 30 million in data in our databases.

This does not include data in documents on the file servers or in emails. SO let's say another 30 million there.

Now, some of our clients compete against each other and we are *very* careful to firewall information so that the data from client A is not seen by client B. Not only could a breach like this resutl in losing client A and/or getting sued by client A, but would ruin our reputation and make it difficult to attract other clients.

The problem is that people take data, good data, far too lightly. Good data is hard to obtain and expensive. Without you are SOL. And so we protect our data and try to insure it is of high quality. We trust no one with the data.

The 'savings' of SaaS are miniscule compared to the risks to the company in this case.

Also data lasts longer than programs or vendors. What happens if the software company goes under or if you need to port it to a new application?

Except for a few cases I think SaaS is very inappropriate and will not be as wide spread as some hope.

You are right though, many companies are already exposing themselves. However, we see it as a false economy. There is no replacement for just doing the work.

Re: "The Network is the Computer"

[drinkypoo]

You rent a car for a weekend trip, or because the car you own is in the shop for major repairs.

This is a great example of why you're wrong. Or at least, partially wrong.

It's only the US that has so many cars. Everywhere else in the world, people are pretty likely to use public transportation. We have cars in the US because of successful lobbying - public funding for the rail network was cannibalized and applied to the highway system instead. As a result, instead of [comparatively] easily and cheaply maintained railways, we have these insanely expensive to maintain roadways, the environmental cost of having zillions of cars each with their own emissions controls which may be functioning or not, instead of a dramatically smaller number of train engines - the smaller number making emissions controls easier.

As a result of the loss of the rail network, and everyone having cars, residential areas exploded - but rail is still used for some freight, and it's otherwise advantageous to keep businesses close together because they must commonly interface with each other. So we got these intensely packed cities and incredibly spread out rural areas. As a result, most people can no longer afford to live in the cities (due to gentrification) and therefore they need a car because public transportation can not effectively serve the needs of a highly distributed population.

However, in the cities, one typically does not need a car at all. The bulk of your groceries can be ordered, and your perishables can be picked up by hand. Because the population is high there are lots of places to shop, so anywhere you go there is typically someplace to get the goods you want/need. Appliances, likewise, can be delivered. And since the population is packed in, public transportation is an effective means of daily travel. Then, people only rent a car when they need one, such as when they are going on a trip.

Another time people rent cars is when they need a vehicle that has capabilities that the one they currently own lacks. For example, if I need to move a large piece of equipment, but I drive a hatchback, if I'm not just paying someone to ship my equipment, I'm going to need to rent a flatbed truck to get it from point A to point B.

Of course, some people who live in the city have and use a car even though they don't need one - they want the "freedom" of being able to decide where they go (even though everything related to cars is heavily regulated.)

The situation with software is similar. Some people use bought-and-owned (well, the companies will tell you that it's all licensed, but that's another conversation) software because they feel that they should, that they need to. That they can't trust anything else. But other people, and I would guess that it's most people, use that kind of software because they can't use anything else. In order to make use of a web office suite feasible, for example, you need a fast, always-on network connection, that is as reliable as your need/desire to use the software. This is only recently coming to the majority of people on this planet - and consequently, software as a service is only just now picking up speed.

Finally, in some cases, it will make more sense to lease some software short-term for a specific project than to purchase it - to cover short-term needs that are not solved by your current software.