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3 Things You Should Know About Cloud Computing Right Now

Jun 08, 2017

It is no understatement to say that public cloud computing is revolutionizing how technology is used. Executives from the top three public cloud providers—Amazon Web Services, Microsoft Azure, and Google Cloud Platform—spoke at the GeekWire Cloud Tech Summit in Bellevue, Wash. this week.

Here are three lessons you need to learn now.

Managing partnerships is critical—and hard

Microsoft (msft) and Amazon are courting major software companies to run their operations on their respective clouds, and many—Tableau (data), Salesforce (crm), Workday (wday)—are doing so.

"We want to win both big customers and the software companies selling to those customers," Scott Guthrie, Microsoft's executive vice president of cloud and enterprise, said at the conference.

Related: Welcome to the Era of Great Data Center Consolidation

The problem is that the major cloud providers offer more than basic computing, networking, and storage building blocks. They are adding more capabilities that compete with software companies they are courting.

For example, while SAP (sap) financial software runs on Microsoft Azure public cloud, SAP also competes with Microsoft Dynamics applications. As Guthrie noted: "If we overlap in places, we have to do that in disciplined ways." Guthrie, who manages both Azure cloud and the Dynamics financial software that competes with SAP, added: "I see SAP as both a competitor and a partner, but we're able to manage that well."

This is déjà vu for Microsoft. Years ago as the company built its Windows franchise, it wanted other software companies to move Microsoft products, which ran on the older DOS operating system. But even as the Windows team pushed third-parties like Lotus Development Corp., then a leader in DOS spreadsheet software, to move to Windows, Microsoft was building its own competitive Windows Excel spreadsheet software. This did not work out so well for Lotus, which ended up being acquired by IBM (ibm).

Guthrie told Fortune that Lotus' fate had more to do with that company being late to Windows than any competition from Microsoft's competitive software. In similar fashion, Guthrie said software companies should quickly commit to cloud or risk falling behind.

Seattle sees itself as 'Cloud City'

Amazon Web Services (amzn), the leader in the public cloud market, was born in Seattle approximately 11 years ago. Microsoft, the second largest public cloud company, is based a few miles east in Redmond. And while Google (goog) is headquartered in Mountain View, Calif., a good chunk of its cloud development work takes place in the Seattle area. Oracle (orcl) also fields much of its nascent cloud work in the area.

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At the conference, Docker's new chief executive Steve Singh said his company will open a significant engineering hub in Seattle or Bellevue soon. Docker, which backs container technology easing the deployment of software that runs in the cloud or in company data centers, is based in San Francisco.

Greg DeMichillie, director of product management for Google Cloud, said that company is constructing a new facility in Seattle's South Lake Union neighborhood to house more Google cloud personnel.

"If you look at the rate at which we are hiring, not just in engineering, our growth here in Seattle is pretty phenomenal,” DeMichillie said. Google also has offices in Seattle's Fremont neighborhood.

Cloud is about running applications—new and old

Fortune 500 companies run lots of decades-old business software that's been patched up and updated over time. Databases, financial accounting systems, and the software that runs manufacturing tasks typically fall into that category. Cloud providers think much of that key business software should move from corporate data centers to the cloud—but such migrations are difficult.

Guthrie, however, said most of Azure's cloud business comes from truly new computing jobs that have never ran in anyone's data center. The Internet of things–in which billions of connected devices from fitness gadgets to appliances to factory gear in order to gather data—is partially responsible for enabling those new scenarios.

"We haven’t seen a huge lift and shift of existing things until recently," Guthrie said. "I think Amazon would say the same thing. Core IT hasn’t been lifting and shifting core workloads until lately."

Related: Microsoft Claims Shipping Giant Maersk as Huge Cloud Win

But, brand new computing tasks—like German auto giant BMW's connected car work, which brings the driver's smartphone, contacts, calendar into the car itself—could not happen without a cloud. Projects like this, Guthrie said, are not necessarily driven by traditional IT staff, but by business units at a given company.

Brian Nowak, executive director at Morgan Stanley, agreed that much cloud work—and revenue—is driven by totally new tasks like these.

"Autonomous cars didn't even exist two years ago," Nowak noted. Connected home devices, like Amazon Echo, are also new. The data that these gadgets collect needs to be analyzed in the cloud, he explained, and that is driving the bulk of public cloud business going forward.

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