FORBES: Computing In The Cloud (Layered Tech)

Tiny Firms Offer Big Computing Services
(FORBES Magazine,
Andy Greenberg, 03.26.08)

Dave Durkee believes in the “Big Switch.” Like tech pundit Nick Carr, who coined that term in his recent book of the same name, Durkee, the CEO of utility computing company Enki, argues that information technology will eventually move out of corporations’ server rooms and into massive, shared facilities, where servers and storage can be hosted more efficiently and piped out to customers. Instead of investing in expensive IT infrastructure, companies will take advantage of computing as a utility, paying their IT bills the same way they pay for water and electricity. 

[A] start-up, Plano, Texas-based Layered Technologies, rents out customized servers by the month to about 4,500 clients. The company hosts a grid of servers that it divides up and rents to clients in packages designed especially to satisfy their hardware needs. Clients can choose to add hardware or subtract machines, like an extra server or storage device, in seconds. Layered Technologies completed its first round of publicly announced funding in mid-March. 

“Utility computing is one of those disruptive technologies that larger players won’t be interested in until it gets big,” says Carr. “That means smaller players can serve the first adopters. The challenge will be when the IBMs, the HPs, and the Suns start to come in to dominate the market.” But don’t count out the little guys, insists Layered’s chief marketing officer, John Pozadzides. Layered’s customers want more than cheap, generic computing power, he contends. As a smaller firm, Layered can customize and scale the resources it rents to every customer, Pozadzides says, whether it’s a start-up search engine or a software-as-service sales and inventory company. 

A different sort of player hoping to squeeze into the utility computing space is 3tera, in Aliso Viejo, Calif. 3tera offers a program that helps utility computing companies divvy up their hardware resources among their customers. Both Enki and Layered use 3tera’s program, known as AppLogic, to create the virtual data centers that they host for their clients; the software lets their customers expand or contract the resources they need in seconds, literally by dragging and dropping components on a computer screen.  “Today, if you want to add a new server, many sets of hands are involved,” says Bert Armijo, 3tera’s vice president of product management. “If you have the ability to instantly provision what you need, that’s when it really becomes a utility.” 3tera, which predicts it will become profitable in the first half of 2008, is a start-up worth watching, says Forrester Research analyst James Staten. The company’s “arms dealer” strategy, he says, will allow it to profit no matter who eventually comes to dominate utility computing. 

As for the other small fry, Staten says, it is too early to pick out potential winners as the industry evolves. But he’s confident that by the time larger customers start to look at utility computing as an attractive option, [smaller companies] may have grown into a real competitor.  “This is classic disruptive innovation, where the mainstream dismisses the product and small companies have time to create a real differentiated value,” says Staten. “When this technology becomes really robust five to seven years from now, the doubters may not be able to compete anymore.”  Read more >>


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