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   Technology StocksCloud, edge and decentralized computing


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From: Glenn Petersen4/28/2019 10:37:26 PM
   of 1522
 
Alibaba Pushes Its Cloud Unit Globally As It Trounces Amazon in Asia

By Lulu Yilun Chen
Bloomberg
April 24, 2019

-- Chinese web giant will continue cloud investment abroad

-- Alibaba Cloud won largest market share in Asia, Gartner says

Alibaba Group Holding Ltd.’s $3 billion cloud services arm is fast becoming an important driver of its global expansion.

The e-commerce giant widened its lead over Amazon.com Inc. and Microsoft Corp. in Asia’s cloud computing market in 2018, according to Gartner, which in turn helped it narrow its global gap with those two rivals. That’s helping Alibaba advance billionaire co-founder Jack Ma’s vision of earning half its revenue beyond China.

Alibaba’s overseas cloud expansion will continue to outpace its domestic growth as the company pushes further into other countries, according to Lancelot Guo, Alibaba Cloud’s vice president and head of strategy. “Internationalization is a key strategy for Alibaba and cloud,” Guo said in a phone interview. “We want to grow even faster.”

The company declined to disclose its budget or revenue target. Guo said it seeks to cater to U.S. companies investing in China and vice versa, and that setting up data centers in Indonesia and Malaysia will help it comply with local data requirements.

The cloud business underpins Alibaba’s revenue growth, helping it offset saturation in its home e-commerce arena. The overall cloud market could grow by 55 percent to $331.2 billion in three years, according to Gartner, and Alibaba’s cloud business has been generating triple-digit revenue growth over the past three years, outpacing the industry.

Gartner estimates that Alibaba last year accounted for 19.6 percent of the Asia region’s markets for infrastructure as a service and infrastructure utility services, two of the most popular forms of cloud business. That means its regional market share rose by nearly a third from 2017, while Amazon’s fell slightly to 11 percent. (Globally, Amazon leads with 30.4 percent to Alibaba’s 4.9 percent.)

It’s been a tumultuous year for global tech operators as the U.S., Europe and countries across Southeast Asia tighten their grip on data services. Vietnam and Thailand are among the nations warming to a stricter model of governance than tech companies have been accustomed to in the internet era.

That’s one reason to invest in local data centers. Alibaba has 15 such facilities in Asia excluding China, including Hong Kong, Australia, India and Japan. “We are very, very sensitive and aware,” said Guo. “We work with a lot of third parties to understand each country’s laws.”

bloomberg.com

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From: Glenn Petersen5/27/2019 10:20:33 AM
   of 1522
 
Nvidia announces its first AI platform for edge devices

by Mike Wheatley
sikiconANGLE
UPDATED 03:30 EDT / MAY 27 2019



INFRA
________________

Nvidia Corp. is bringing artificial intelligence to the edge of the network with the launch early Monday of its new Nvidia EGX platform that can perceive, understand and act on data in real time without sending it to the cloud or a data center first.

Delivering AI to edge devices such as smartphones, sensors and factory machines is the next step in the technology’s evolutionary progress. The earliest AI algorithms were so complex that they could be processed only on powerful machines running in cloud data centers, and that means sending lots of information across the network. But this is undesirable because it requires lots of bandwidth and results in higher latencies, which makes “real-time” AI something less than that.

What companies really want is AI to be performed where the data itself is created, be it at manufacturing facilities, retail stores or warehouses. And it’s a problem that several tech firms have attempted to address, most recently Intel Corp. with the launch of its first 10-nanometer “Ice Lake” chips today but also dozens of startups.

But Nvidia’s entrance into the AI edge is notable because the company’s graphics processing units are widely regarded as some of the best AI-processing hardware around. That includes its Tesla V100 for deep learning, and its Quadro GV100, which enables ray tracing, the process of creating realistic images, to be done in real time.

The new NVIDIA EGX platform is scalable from a light server based on the Jetson Nano processor that performs 0.5 Trillion operations per second in a few watts, to a micro data center with a rack of NVIDIA T4 based edge servers that can do 10,000 trillion operations per second. The energy-saving capabilities of the chip are important for AI, since traditional hardware is a massive power hog when running such tasks.

In a media briefing, Justin Boitano, senior director of enterprise and edge computing at Nvidia, said there will be huge demand for a platform such as NGX because there will be something like 150 billion machine sensors and “internet of things” devices in the world by 2025. He said many of these sensors would be used for initiatives such as “smart cities,” and will be pumping out data that needs to be processed onsite, for reasons such as a demand for lower latency, real-time response, data sovereignty rules or privacy concerns.

“AI is really the killer application in all industries both in vision and in speech,” Boitano said.

Partnerships are important as well if people are actually going to put those chips to good use. For that reason Nvidia is integrating the NVIDIA Edge Stack software than runs on EGX with Red Hat Inc.’s OpenShift Kubernetes container orchestration platform in order to make it compatible with modern software applications.

The platform also integrates security, storage and networking technologies from Mellanox Technologies Ltd., which is a company that Nvidia intends to acquire by the end of year for a cool $6.9 billion.



“Mellanox Smart NICs and switches provide the ideal I/O connectivity for data access that scale from the edge to hyperscale data centers,” said Mellanox Chief Technology Officer Michael Kagan.

Nvidia is teaming up with no fewer than 13 different server makers to sell the EGX platform, including big-name manufacturers such as Cisco Systems Inc., Dell-EMC, Hewlett Packard Enterprise Co. and Lenovo Group Holding Ltd.

NGX is also compatible with AI applications running on major cloud infrastructure services such as Amazon Web Services and Microsoft Azure, and can connect to IoT services such as AWS IoT Greengrass and Azure IoT Edge.

images: Nvidia



https://siliconangle.com/2019/05/27/nvidia-announces-first-ai-platform-edge-devices/

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From: Glenn Petersen6/5/2019 3:02:53 PM
   of 1522
 
Mee described some of the complexity in the market as related to public cloud companies providing traditional on-premises offerings. He didn’t provide names, but Amazon Web Services leads the public cloud market and has been promoting its ability to serve customers even in their own data centers. He also mentioned Kubernetes, open-source software created at Google that lets developers easily move around their applications and workloads.

Pivotal Software loses almost half its value after ‘train wreck’ of an earnings report

Published an hour ago
Jordan Novet@jordannovet
CNBC.com
  • Wedbush downgraded Pivotal stock in the wake of the earnings report.
  • The company said it’s taking steps to fix sales execution issues.



Pivotal Software CEO Rob Mee.
Source: Pivotal Software
________________________`

Pivotal Software shares crashed on Wednesday, knocking off about half the company’s market value, after a light revenue forecast raised concerns that demand for its products is weakening.

The stock plunged as much as 45% to a low of $10.10, pulling its market capitalization below $3 billion. Prior to Wednesday, Pivotal’s worst day since its IPO last year came in September, when the shares dropped 20%.

Pivotal, which sells subscriptions for software that’s designed to help companies deploy applications across multiple clouds, lowered its full-year revenue guidance and now expects sales of $756 million to $767 million, well below the Refinitiv consensus estimate of $803 million.

CEO Rob Mee told analysts on a conference call after hours on Tuesday that the company was experiencing sales execution problems.

“Some of the deals we expected to close in Q1 slipped,” Mee said. He highlighted “a complex technology landscape that is lengthening our sales cycle.”



It’s a theme investors have heard from other enterprise technology vendors competing in crowded markets against large incumbents and high-growth upstarts. Pure Storage had its worst day ever as a public company last month following disappointing earnings. In lowering its outlook for the year earlier this week, Box Chief Financial Officer Dylan Smith pointed to “anticipation of longer sales cycles across our larger deals.” Zuora CEO Tien Tzuo said his company needed to improve its sales execution based on its latest quarterly results, which led to a 30% plunge in the stock on Friday.

For the fiscal second quarter, Pivotal expects revenue of $185 million to $189 million, trailing the average analyst estimate of $198 million, according to Refinitiv.

Mee described some of the complexity in the market as related to public cloud companies providing traditional on-premises offerings. He didn’t provide names, but Amazon Web Services leads the public cloud market and has been promoting its ability to serve customers even in their own data centers. He also mentioned Kubernetes, open-source software created at Google that lets developers easily move around their applications and workloads.

“I think it’s really causing customers to take their time and think about what they’re doing,” Mee said. He added that the company named a new head of sales for the Americas.

Pivotal’s first-quarter results were actually better than expected. The company reported a loss of 3 cents per share, excluding certain items, on $185.7 million in revenue. Analysts polled by Refinitiv had been expecting a loss of 5 cents per share on $184.1 million in revenue.

Some analysts downgraded the stock after the report. Daniel Ives and Strecker Backe of Wedbush Securities, reduced their rating to “neutral” from “outperform,” cut their price target from $26 to $15 and described the quarter and guidance as a “train wreck.”

“It is clear to us that this management team does not have a handle on the underlying issues negatively impacting its sales cycles and the activity in the field which gives us concern that this quarter will be the start of some ‘dark days ahead’ for Pivotal,” the analysts wrote.

They said Pivotal could be an acquisition prospect over time, but for now no buyer would closely consider it because of the issues it faces with growth.

Alex Kurtz and Steven Enders of KeyBanc Capital Markets maintained their “overweight” rating on Pivotal but lowered their price target from $27 to $21.

“Better understanding the breadth of the demand slowdown will be an important factor in this lowered outlook, as the miss could be localized to a handful of accounts given PVTL deal size,” the analysts wrote.

With Wednesday’s drop, Pivotal shares are down 34% this year.

cnbc.com

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From: FUBHO6/6/2019 1:55:19 PM
2 Recommendations   of 1522
 
Microsoft and Oracle to combine clouds
1h | Natalie Bannerman

www.capacitymedia.com
Microsoft and Oracle have entered into a cloud interoperability partnership enabling customers to migrate and run enterprise workloads across Microsoft Azure and Oracle Cloud.

Thanks for the partnership enterprises can connect Azure services like Analytics and AI, to Oracle Cloud services like Autonomous Database.

“As the cloud of choice for the enterprise, with over 95% of the Fortune 500 using Azure, we have always been first and foremost focused on helping our customers thrive on their digital transformation journeys,” said Scott Guthrie (pictured), executive vice president of Microsoft’s Cloud and AI division. “With Oracle’s enterprise expertise, this alliance is a natural choice for us as we help our joint customers accelerate the migration of enterprise applications and databases to the public cloud.”

By allowing customers to run one of part of their workload in Azure and the other in Oracle Cloud it enabling a best-of-both-clouds experience, creating a one-stop shop for all the cloud services and applications they need to run their business.

In addition to providing interoperability for customers running Oracle software on Oracle Cloud and Microsoft software on Azure, it enables new and innovative scenarios like running Oracle E-Business Suite or Oracle JD Edwards on Azure against an Oracle Autonomous Database running on Exadata infrastructure in the Oracle Cloud.

“The Oracle Cloud offers a complete suite of integrated applications for sales, service, marketing, human resources, finance, supply chain and manufacturing, plus highly automated and secure Generation 2 infrastructure featuring the Oracle Autonomous Database,” said Don Johnson, executive vice president, Oracle Cloud Infrastructure (OCI). “Oracle and Microsoft have served enterprise customer needs for decades. With this partnership, our joint customers can migrate their entire set of existing applications to the cloud without having to re-architect anything, preserving the large investments they have already made.”

Through the expanded partnership, a number of new capabilities have been made available including:

  • Seamless connection to Azure and Oracle Cloud , allowing customers to extend their on-premises data centres to both clouds.
  • Unified identity and access management, via a unified single sign-on experience and automated user provisioning, to manage resources across Azure and Oracle Cloud.
  • Supported deployment of custom applications and packaged Oracle applications on Azure with Oracle databases (deployed in Oracle Cloud.
  • A collaborative support model to help IT organisations deploy these new capabilities while enabling them to use existing customer support relationships and processes.

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    From: Glenn Petersen6/10/2019 9:30:41 AM
       of 1522
     
    Salesforce counters Microsoft:

    Salesforce is buying data visualization company Tableau for $15.7B in all-stock deal

    Ingrid Lunden @ingridlunden
    TechCrunch
    June 10, 2019

    On the heels of Google buying analytics startup Looker last week for $2.6 billion, Salesforce today announced a huge piece of news in a bid to step up its own work in data visualization and (more generally) tools to help enterprises make sense of the sea of data that they use and amass: Salesforce is buying Tableau for $15.7 billion in an all-stock deal.

    The latter is publicly traded and this deal will involve shares of Tableau Class A and Class B common stock getting exchanged for 1.103 shares of Salesforce common stock, the company said, and so the $15.7 billion figure is the enterprise value of the transaction, based on the average price of Salesforce’s shares as of June 7, 2019.

    This is a huge jump on Tableau’s last market cap: it was valued at $10.79 billion at close of trading Friday, according to figures on Google Finance. (Also: trading has halted on its stock in light of this news.)

    The two boards have already approved the deal, Salesforce notes. The two companies’ management teams will be hosting a conference call at 8am Eastern and I’ll listen in to that as well to get more details.

    This is a huge deal for Salesforce as it continues to diversify beyond CRM software and into deeper layers of analytics.

    The company reportedly worked hard to — but ultimately missed out on — buying LinkedIn (which Microsoft picked up instead), and while there isn’t a whole lot in common between LinkedIn and Tableau, this deal is also about extending engagement with the customers that Salesforce already has.

    This also looks like a move designed to help bulk up against Google’s move to buy Looker, announced last week, although I’d argue that analytics is a big enough area that all major tech companies that are courting enterprises are getting their ducks in a row in terms of squaring up to stronger strategies (and products) in this area. It’s unclear whether (and if) the two deals were made in response to each other.

    “We are bringing together the world’s #1 CRM with the #1 analytics platform. Tableau helps people see and understand data, and Salesforce helps people engage and understand customers. It’s truly the best of both worlds for our customers–bringing together two critical platforms that every customer needs to understand their world,” said Marc Benioff, Chairman and co-CEO, Salesforce, in a statement. “I’m thrilled to welcome Adam and his team to Salesforce.”

    Tableau has about 86,000 business customers including Charles Schwab, Verizon (which owns TC), Schneider Electric, Southwest and Netflix. Salesforce said it will operate independently and under its own brand post-acquisition. It will also remain headquartered in Seattle, WA, headed by CEO Adam Selipsky along with others on the current leadership team.

    That’s not to say, though, that the two will not be working together: on the contrary, Salesforce is already talking up the possibilities of expanding what the company is already doing with its Einstein platform ( launched back in 2016, Einstein is the home of all of Salesforce’s AI-based initiatives); and with “Customer 360”, which is the company’s product and take on omnichannel sales and marketing. The latter is an obvious and complementary product home, given that one huge aspect of Tableau’s service is to provide “big picture” insights.

    “Joining forces with Salesforce will enhance our ability to help people everywhere see and understand data,” said Selipsky. “As part of the world’s #1 CRM company, Tableau’s intuitive and powerful analytics will enable millions more people to discover actionable insights across their entire organizations. I’m delighted that our companies share very similar cultures and a relentless focus on customer success. I look forward to working together in support of our customers and communities.”

    “Salesforce’s incredible success has always been based on anticipating the needs of our customers and providing them the solutions they need to grow their businesses,” said Keith Block, co-CEO, Salesforce. “Data is the foundation of every digital transformation, and the addition of Tableau will accelerate our ability to deliver customer success by enabling a truly unified and powerful view across all of a customer’s data.”

    More to come as we learn it. Refresh for updates.

    techcrunch.com

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    From: Glenn Petersen6/12/2019 12:51:55 PM
       of 1522
     
    CrowdStrike pops nearly 80% in debut, now worth about $12 billion

    Published 42 min agoUpdated Moments Ago
    Lauren Feiner @lauren_feiner
    CNBC.com
    • CrowdStrike opened its first day of trading on the Nasdaq with a share price of $63.50, surging from its IPO price of $34.
    • The company provides cloud-based security software to companies like Amazon Web Services and Credit Suisse.
    • CrowdStrike recorded a net loss of $140 million for the year ended Jan. 31, while revenue more than doubled to $249.8 million.



    George Kurtz
    Heidi Petty | CNBC
    _______________

    CrowdStrike rocketed as much as 97% in its first day of trading on the public market on Wednesday. The security software vendor opened trading at $63.50 after it priced its IPO at $34 a share, above the high end of its expected range of $28 to $30 per share.

    The stock settled to a pop of more than 78%, pushing its market cap to about $12 billion, quadruple the valuation from its last private round in June 2018. The company is worth more than 37-year-old security software provider Symantec despite having about 5% as much revenue.

    Crowdstrike, trading on the Nasdaq under ticker symbol “CRWD,” joins a rapidly growing 2019 IPO class, which already includes Uber, Lyft and Pinterest. In the business software market, CrowdStrike follows the debuts of Zoom and PagerDuty and comes just a head of Slack’s direct listing.

    With the first-day surge, CrowdStrike CEO George Kurtz is a billionaire, and the company’s early backers are notching huge returns. Warburg Pincus owns a stake worth over $3 billion. Accel’s stake is valued at over $2 billion, and Alphabet’s CapitalG controls shares worth over $1 billion.

    CrowdStrike, whose cloud-based technology is used to detect and prevent breaches, recorded a net loss of $140 million for the year ended Jan. 31, while revenue more than doubled to $249.8 million, according to the company’s prospectus.

    The company counts Credit Suisse, Tribune Media and Amazon Web Services among its customers.

    cnbc.com

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    From: Glenn Petersen6/28/2019 2:57:28 PM
       of 1522
     
    Enterprise SaaS revenue hits $100B run rate, led by Microsoft and Salesforce

    Ron Miller
    TechCrunch
    June 27, 2019


    In its most recent report, Synergy Research, a company that monitors cloud marketshare, found that enterprise SaaS revenue passed the $100 billion run rate this quarter. The market was led by Microsoft and Salesforce.

    It shouldn’t be a surprise at this point that these two enterprise powerhouses come in at the top. Microsoft reported $10.1 billion in Productivity and Business Processes revenue, which includes Office 365, the Dynamics line and LinkedIn, the company it bought in 2016 for $26.2 billion. That $10.1 billion accounted for the top spot with 17 percent

    Salesforce was next with around 12%. It announced $3.74 billion in revenue in its most recent earnings statement with Service Cloud alone accounting for $1.02 billion in revenue, crossing that billion-dollar mark for the first time.

    Adobe came in third, good for around 10% market share, with $2.74 billion in revenue for its most recent report. Digital Media, which includes Creative Cloud and Document Cloud, accounted for the vast majority of the revenue with $1.8 billion. SAP and Oracle complete the top companies



    A growing marketWhile that number may seem low, given we are 20 years into the development of the SaaS market, it is still a significant milestone, not to be dismissed lightly. As Synergy pointed out, while the market feels mature, if finds that SaaS revenue still accounts for just 20 percent of the overall enterprise software market. There’s still a long way to go, showing as with the infrastructure side of the market, things change much more slowly than we imagine, and the market is growing rapidly, as the impressive growth rates show.

    “While SaaS growth rate isn’t as high as IaaS (Infrastructure as a Service) and PaaS (Platform as a Service), the SaaS market is substantially bigger and it will remain so until 2023. Synergy forecasts strong growth across all SaaS segments and all geographic regions,” the company wrote in its report.

    Salesforce is the only one of the top five that was actually born in the cloud. Adobe, an early desktop software company, switched to cloud in 2013. Microsoft, of course, has been a desktop stalwart for many years before embracing the cloud over the last decade. SAP and Oracle are traditional enterprise software companies, born long before the cloud was even a concept, that began transitioning when the market began shifting.

    Getting to a billionYet in spite of being late to the game, these numbers show that the market is still dominated by the old guard enterprise software companies and how difficult it is to achieve market dominance for companies born in the cloud. Salesforce emerged 20 years ago as an early cloud adherent, but of all of the enterprise SaaS companies that were started this century only ServiceNow and WorkDay show up in the Synergy list lumped in “the next 10.”

    That’s not to say there aren’t SaaS companies making some serious money, just not quite as much as the top players to this point. Jason Lemkin, CEO and founder at SaaStr, a company that invests in and supports enterprise SaaS companies, says a lot of companies are close to that $1 billion goal than you might think, and he’s optimistic that we are going to see more.

    “We will have at least 100 companies top $1 billion in ARR, probably many more. It is just math. Almost everyone IPO’ing [SaaS company] has 120-140% revenue retention. That will compound $100 million or $200 million to $1 billion. The only question is when,” he told TechCrunch.



    Chart courtesy of SaasStr

    __________________________

    He adds that annualized numbers are very close behind ARR numbers and it won’t take long to catch up. Yet as we have seen with some of the companies on this list, it’s still not easy to get there.

    techcrunch.com

    It’s hard to develop a billion dollar SaaS company, and it takes time and patience, and perhaps some strategic acquisitions to get there, but the market trajectory continues to move upward. It will likely only grow stronger as more companies move to software in the cloud, and that bodes well for many of the players in this market, even those that didn’t show up on Synergy’s chart.

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    From: Glenn Petersen7/17/2019 5:05:41 PM
       of 1522
     
    A big win for Microsoft:

    Microsoft wins multibillion-dollar cloud deal from AT&T

    Published Wed, Jul 17 2019 9:00 AM EDTUpdated 4 hours ago
    Jordan Novet
    Josh Lipton
    CNBC.com
    • All AT&T Communications employees will use Microsoft 365, which includes Windows 10 and Office 365.
    • AT&T will move applications to Microsoft’s Azure cloud.
    • The deal is not exclusive, as AT&T announced a separate deal this week.



    Microsoft just scored a marquee deal for its cloud business, announcing Wednesday that AT&T will use the company’s Azure infrastructure and move most of its employees to the Microsoft 365 package of productivity apps and security services.

    The multiyear deal is worth more than $2 billion, according to a person familiar with the matter who asked not to be named because the terms are confidential. For Microsoft, which is chasing Amazon Web Services in the cloud infrastructure market, AT&T represents both a hefty buyer and a highly recognizable brand with significant data storage and computing needs for its more than 250,000 staffers.

    Beyond AT&T’s own internal use of Microsoft technology, the companies are working together on developing tools for artificial intelligence and high-speed 5G wireless, and plan to announce additional services later this year.

    “With things like 5G coming together, we absolutely think the combination of AT&T and Microsoft can really go fulfill the demand which is going to be very broad-based across what is commercially led innovation,” Microsoft CEO Satya Nadella told CNBC in an interview. “This next phase of, I’ll call it the cloud and edge and AI era, will be led by what I would broadly call more production versus just consumption.”

    Accenture estimated last year that U.S. telecom operators will spend $275 billion over seven years to build out communications networks for autonomous cars and the world of connected devices, or internet of things.

    Many of Microsoft’s big wins of late have come in the retail market, where companies like Gap, Kroger, Albertsons and Walmart’s Jet.com don’t want to finance Amazon, their biggest competitor, especially as the e-commerce leader pushes further into physical retail. AT&T is a longtime customer of Microsoft and, in moving its technology to the cloud and the latest apps, underscores how Microsoft can use its existing position in the enterprise market as an advantage over AWS.

    “The ability to work with someone who has a really strong track record in how enterprises are creating, recreating themselves into a digital form is a very important part of why we selected Microsoft,” John Donovan, CEO of the AT&T Communications business, said in an interview with CNBC.

    The deal is not exclusive, and AT&T is permitted to use other cloud providers in addition to Azure, Donovan said. On Tuesday, IBM announced a deal with AT&T that involves cloud migration.

    Microsoft investors are counting on continued expansion out of Azure, which grew 73% in the latest quarter, though the company still doesn’t break out numbers from the business. Its achievements in cloud have been the driving force behind Nadella’s success since he was elevated to CEO in 2014, and have catapulted Microsoft past $1 trillion in market cap to become the world’s most valuable publicly traded company.

    Shareholders are so bullish on Microsoft’s prospects that they now value the company at more than 26 times earnings for the next 12 months, the highest multiple since 2002, according to FactSet.

    AT&T says it’s becoming a “public cloud first” company, moving applications from its data centers to Azure and employees in its communications business to Microsoft 365, which includes Windows 10, Office 365, and mobility and security services. AT&T Communications accounts for about 78% of total company revenue.

    cnbc.com

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    From: Glenn Petersen7/17/2019 8:49:40 PM
       of 1522
     
    Trump Expressed Concern About Pentagon Cloud-Computing Contract

    By Jennifer Jacobs, Naomi Nix, and Steven T. Dennis
    Bloomberg
    July 17, 2019

    -- Pentagon poised to give JEDI contract to Amazon or Microsoft

    -- President frustrated he was unaware of Republican concerns



    Donald Trump Photographer: Al Drago/Bloomberg
    _____________________

    President Donald Trump recently demanded more information about how the Pentagon crafted a massive cloud-computing contract it’s poised to award to Amazon.com Inc. or Microsoft Corp., in order to decide whether he should intervene.

    The Defense Department is set to give the contract, worth as much as $10 billion over ten years, to one of the two companies next month. Amazon, whose cloud-computing technology leads the market, is seen as the favorite.

    But Trump recently was made aware of letters Republican members of Congress have written to the White House and military leaders complaining that the contract’s terms froze some companies -- including Oracle Corp. -- out of the competition, according to two people familiar with the matter. Trump expressed frustration he wasn’t aware of the concerns and asked aides to show him the correspondence, the people said.

    Trump said he’s interested in looking into the circumstances of the bid but didn’t indicate he’ll try to block the contract from being awarded to one of the two finalists, they said.

    Senate Homeland Security Chairman Ron Johnson, a Wisconsin Republican who recently wrote to the Pentagon to express concerns about the contract, said in an interview that he discussed it with the president aboard Air Force One last week.

    “He wanted to understand what the issues were, what our concerns were,” Johnson said in an interview.

    Senator Marco Rubio, a Florida Republican, sent a letter to National Security Adviser John Bolton on Thursday asking him to delay the contract award, saying the bid “suffers from a lack of competition.” Trump and Rubio spoke about the contract by phone the next day, a Rubio spokesman said.

    A person familiar with the call said that it sounded as if Trump was thinking about canceling the contract.

    All of the people asked not to be identified discussing a sensitive procurement issue. Spokesmen for the White House and Pentagon didn’t immediately respond to requests for comment.

    While Trump has leaned on defense contractors to reduce costs on contracts they already hold -- and even to paint new Air Force One planes in his choice of colors -- it may be unprecedented for a president to intervene in a defense contract competition while it’s underway.

    The cloud-computing program, known as Joint Enterprise Defense Infrastructure or JEDI, has been contentious. Legacy tech companies including Oracle and International Business Machines Corp. waged a fierce lobbying and legal campaign against the Pentagon’s plan to award the contract to a single company.

    “Nothing good can come from President Trump becoming personally involved in an individual procurement, particularly one of this complexity,” said Steven Schooner, a professor of government procurement law at George Washington University. “Historically, the system has operated best with limited -- to no -- high-level political involvement.”

    Oracle lost a legal challenge last week contesting the terms of the bid and alleging the Pentagon had crafted unfair requirements and that there were conflicts of interest involving Amazon. Republican lawmakers have taken up Oracle’s cause, pressuring the White House to intervene in the Pentagon project.

    Oracle at one point coordinated with at least seven other companies including Microsoft and SAP America to try to block Amazon from winning the entire contract, Bloomberg News has reported. Amazon has already won a contract with the Central Intelligence Agency.

    Oracle declined to comment for the story.

    In April 2018, Oracle Corp. Chief Executive Officer Safra Catz dined with Trump at the White House and complained that it seemed designed for Amazon to win, Bloomberg has reported. The final requirements for the contract were released in July of that year.

    The White House raised concerns about the contract with senior Pentagon leaders while they were still drafting the final requirements for the deal, according to a person familiar with the matter.

    (Updates with expert comment in 12th paragraph. The spelling of Oracle CEO Safra Catz’s name was corrected in a previous version of the story.)

    bloomberg.com

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    From: Glenn Petersen7/20/2019 10:08:03 AM
       of 1522
     
    Cloud Gaming Is Big Tech’s New Street Fight

    Streaming video games promises to be an all-out brawl among companies with the internet infrastructure to back it up. At stake? Billions of dollars and the future of a fast-growing industry. What, you thought this was a game?

    By Jonathan Vanian
    Forbes
    July 19, 2019



    Look familiar? We asked Stephen Bliss, the illustrator for Grand Theft Auto: Vice City and others, to imagine the Big Three cloud CEOs as 1980s urban crime lords. Bitchin’.Illustration by Stephen Bliss; Illustration from photographs: Bezos: Mark Wilson—Getty Images; Nadella: Abdulhamid Hosbas/Anadolu Agency—Getty Images; Pichai: Ramin Talaie—Getty Images; Building: Smith Collection/Gado—Getty Images; Google drones: Charles Mostoller/Bloomberg via Getty Images; Palm Tree: Denis Tangney Jr.—Getty Images; Controller: Jason Arthurs/Bloomberg via Getty Images
    _____________________________

    Where is John? That’s the question hanging over you as your team of armored soldiers methodically searches this foreign vessel for a comrade—and war hero—seemingly gone rogue. It’s the year 2558; humans are under attack by alien forces. The last thing you need right now is to have one of your trained killers switch sides.

    You cautiously step through the cramped corridors of the spaceship. It’s dark—distressingly so—but for an eerie blue light emanating from the ship’s walls. Your teammates would be in complete silhouette but for the cobalt glints on their weapons. You see shadows you don’t recognize and quietly extend your finger toward your rifle’s trigger. A sapphire streak ripples across its scope.

    But they hear you! The aliens’ weapons burst with a kaleidoscope of lethal laser fire that ricochets off the ship’s panels. You sidestep in an effort to get a clear shot—if only you had a little more room—but it’s too late. Before you can return fire, a well-placed beam sends you to a rainbow-colored grave.

    Game over. (Start again?)

    For nearly two decades, scenes like this one have unfolded in living rooms across the globe, thanks to Microsoft’s long-running video game franchise Halo, playable on the tech giant’s ever-popular Xbox home console. But the rich gameplay described above, which Fortune witnessed during a recent visit to the company’s headquarters in Redmond, Wash., needed no brawny consumer electronics to run with the speed and splendor expected of a modern first-person shooter, as such computationally intensive games are known. It required only a smartphone—in this case, paired with a conventional Xbox controller.



    Have smartphones become that good? Not quite. But their tremendous proliferation—more than 5 billion people across the globe own mobile phones, according to 2019 Pew estimates, and more than half of those devices are Internet-connected smartphones—has dramatically changed the way media is consumed. Music, portable since the days of Sony’s Walkman, is now streamed on the go. Movies and television, once limited to larger fixed screens, are now delivered to people’s pockets over the air.

    Now video games are preparing to take their turn. If you’re not a gamer, you may not realize just how monumental a metamorphosis streaming promises to be. Today’s video game industry is a behemoth expected to generate $152 billion worldwide this year, according to market researcher Newzoo. That’s 57% more than the $97 billion generated by the global theatrical and home-movie market last year, and eight times the $19.1 billion generated by the global recorded music market. Like those industries, video game makers are grappling with the seemingly boundless potential of streaming, and the race is on to see who gets it right first.

    The secret sauce powering all of this media streaming is a technology concept every executive is now familiar with: cloud computing. The off-loading of “compute” to staggeringly large server farms in remote locations, linked to our personal devices with persistent Internet connections, affords each of us on-demand access to supercomputer-level number-crunching power. This capability—plus forecasts that the global gaming industry could reach $196 billion in annual sales by 2022, per Newzoo—is why Microsoft, a gaming-industry stalwart that also happens to be a leading provider of cloud services, is so intrigued by so-called cloud gaming.

    It’s also why Halo 5 on a Samsung Galaxy smartphone can still manage such impressive visual pyrotechnics. The demonstration on view in Redmond is really running on the “racks” in a Microsoft data center in Quincy, Wash., 160 miles away. The Quincy facility is one of 13 the company plans to use to host its ambitious Project Xcloud game-streaming service when it begins a public trial this fall.



    The last big breakthrough in gaming came a decade ago, when the birth of the smartphone gave rise to rudimentary but wildly popular mobile-first titles like Candy Crush and Angry Birds. “Ultimately the appeal of cloud gaming is the same thing,” says Newzoo analyst Tom Wijman. “You can reach all of this audience without them needing to have a high-end gaming PC or expensive console.”

    The folks in Redmond are not alone in their interest. Google, which has fervently expanded its cloud division, announced a cloud-­gaming platform called Stadia that it promises to launch by year’s end. Meanwhile, crosstown rival Amazon, the leading cloud-services company by a country mile, is evaluating how to take its viewing platform Twitch, a top destination for people who watch other people play games, to even greater heights. Behind the big boys, a motley crew of lesser challengers—from Fortune 500 peers like Apple, Nvidia, Walmart, and Verizon to gamemakers like Electronic Arts and Valve to startups like Blade and Parsec—are developing or said to be investigating game-streaming subscription services of their own.

    But none of them have cloud-computing muscle like the Big Three, which otherwise use their infrastructure to power the software and services they’re best known for. Whether Amazon, Google, or Microsoft succeeds in crafting the next great console in the sky is almost immaterial. In any case, they’ll all stand to benefit.

    Satya Nadella has grown used to the naysayers. For years, Wall Street analysts questioned why Microsoft, the company famous for its Windows operating system and Office business suite, would waste money on something so seemingly trivial as video games. The calls grew louder when Nadella took the company’s helm in July 2014. Still smarting from his predecessor’s missteps in mobile devices, Nadella promised to steer Microsoft away from consumer distractions and toward its highly lucrative business services. Some even urged Microsoft to exit the gaming business altogether. “Four to five years ago, we and others were calling for them to divest that piece of the business,” says Daniel Ives, managing director of Wedbush Securities and a longtime Microsoft observer. That tune has changed: Last year, Microsoft’s gaming revenue—which includes Xbox, Windows games, and a cut of third-party gaming sales—topped $10 billion for the first time.

    When I ask Nadella why the company didn’t drop gaming, he chuckles. “There were a lot of things that a lot of people said Microsoft should be doing,” he says. “If I listened to everything that everybody else on the outside asks me to do, there would be very little innovation in this company.”

    To be fair, in years past, Nadella had been hesitant to call gaming business core to Microsoft’s overall strategy. Despite its success, gaming represents about a tenth of Microsoft’s annual revenue. Cloud-computing growth is a big reason that the company’s market capitalization topped $1 trillion this year; its “intelligent cloud” unit, which includes its Azure cloud-computing service, generates as much revenue in a quarter as the gaming group generates in a year. (Hasta la vista, Halo!)



    But what if you could hitch gaming’s fortunes to Microsoft’s potent cloud engine? Well, now you’re talking. Nadella’s blockbuster $2.5 billion acquisition of the enormously popular world-building game Minecraft in 2014 was a “bit of a head-scratcher” when it was first announced, says analyst Ives, but it’s now clear that the CEO was “planting the seed of how he viewed gaming as part of the broader business.” Microsoft wouldn’t just retain video games. Much as the company managed with Windows and Office, it would use the flywheel of its cloud-computing infrastructure to dramatically boost the scale of its gaming business—and the fortunes of every video game publisher it works with—far beyond what was previously possible.

    Today, gaming is unquestionably “core”; in late 2017, Nadella elevated gaming lead Phil Spencer to the company’s executive leadership team to underscore the point. And executives are bullish on the prospects of cloud-driven gameplay. Julia White, who leads product management for Microsoft’s cloud platform, estimates that the business of selling Azure services to video game publishers is worth $70 billion—about as much as publicly traded transportation darling Uber. Most of today’s Internet-connected video games are developed in, and operated from, private data centers run by game publishers, she says. Technology trends in other industries suggest that won’t last. “Even though game developers are in a very different business,” she says, “they face the same trials and tribulations of a commercial bank or a retail company going to the cloud.”

    To the cloudmaster go the spoils: In January, the Xbox maker shocked the gaming world by landing longtime console adversary Sony (of PlayStation fame) as an Azure customer with a promise to collaborate on future unspecified gaming projects. It was as if General Motors and Ford had announced a partnership to take on Tesla—an unmistakable sign that the competitive landscape would rapidly and dramatically change.

    It was also an indication that Nadella’s mission for Microsoft would be more expansive than it originally appeared. When I ask him why Microsoft is working so hard to build a consumer entertainment service when it has positioned itself as an enterprise software company, he replies, “It’s a bigger business, right? It’s bigger than any other segment. Why would I not do gaming? It fits with what we do. It has connective tissue to the common platform. We have a point of view that what we can do is unique.”

    The problem: so does every other player in this game.

    For 39,000 viewers tuned into Twitch, Elvis might as well have entered the building. Richard Tyler Blevins, the 28-year-old celebrity “streamer” known to fans by his moniker Ninja, has logged on to the service to play a few public rounds of the popular “battle royale” game Fortnite with his buddy. As his avatar runs and leaps through the game’s virtual environment, weapon in hand, Blevins barks commands like an NFL quarterback at the snap—and his Twitch viewers hang on every mundanity. Their comments rush by in the chat window accompanying Ninja’s feed. Some viewers respond to every move Blevins’s character makes (“get that delay ninja”); others practically ignore the show to talk among themselves. (One thread of conversation among many: Why Finding Nemo was a “pretty good” Pixar movie.)

    In other words, just another day on Twitch. Viewers—overwhelmingly male and mostly 34 or younger—watched a breathtaking 9.36 billion hours of gameplay on the platform last year, according to estimates by production company StreamElements. Twitch launched in 2011 as a spinoff of streaming video site ­Justin.tv, a pioneer in user-­generated content. In 2014, Amazon reportedly spent $970 million to acquire the site, besting YouTube-owner Google in a bidding war. Wedbush analyst Michael Pachter estimates that Twitch brought in $400 million in revenue last year.

    Twitch, which is housed in Amazon Web Services, the online retailer’s cloud-computing unit, has rapidly become a cornerstone of the company’s broader video gaming strategy. AWS, as Amazon Web Services is known, is already selling computing resources and developer tools to video game publishers. It’s also rumored to be working on a service that would allow it to stream video games themselves rather than merely video of people playing them. (The company declined to comment, though recent job listings for technical roles for “an unannounced AAA games business” suggest its intentions. Like minor league baseball, “AAA” denotes the highest level of play in terms of budget and production.)



    Bonnie Ross, head of Microsoft-owned game studio 343 Industries, mugs with a statue of Master Chief, the protagonist of its Halo series, at the studio's headquarters in Redmond, Wash. Photo by Chona KasingerTwo major milestones in the gaming industry set the stage for a cloudy future. The first: The massive success of Epic Games’ Fortnite, which brought in an estimated $2.4 billion in sales last year and now claims 250 million registered players. Fortnite demonstrated that “cross-platform” games, playable across competing devices from Microsoft, Sony, Apple, and others, could amass audiences far larger than those of the previous era, when titles were limited to specific ecosystems. “Fortnite was critical in getting the message across to all platforms that they have to lower the barrier of entry to their respective walled gardens,” says Joost van Dreunen, head of games for market researcher SuperData.

    The second? Twitch. The service demonstrated that people were just as happy to watch and cheer people playing games—call it the kid-sibling phenomenon—as they were to play the games themselves. That kind of interactivity proved that engagement and gameplay were not one and the same. The dynamic expands the addressable viewership for a given title. “Viewing is eclipsing gaming, and a lot of youth of today would say they played the game when they really viewed the game,” says Bonnie Ross, head of 343 Industries, the Microsoft studio that develops Halo.

    For Microsoft’s part, the company never saw the spectatorship aspect coming. “Amazon has Microsoft on a treadmill,” a former executive says. Two years after Amazon bought Twitch, Microsoft acquired competing service Beam for an undisclosed amount. Rechristened Mixer, it has become the means by which Xbox customers can watch one another play games, logging 39.6 million hours of viewing in 2018, per StreamElements—a whopping 179% more than the previous year but still a distant third to Amazon’s Twitch and Google’s YouTube Live.

    The summer sun blazes above the thousands of coders assembled for Google’s ­annual I/O developer conference in Mountain View, Calif., but the anxiety on display in the long line has little to do with the weather. The event’s attendees, who base their livelihoods on building software for as many users as possible, are keen to hear Google’s sales pitch for why they should create games for Stadia, an experimental cloud-gaming service that the search giant promises to debut in November.

    Like most Silicon Valley presentations, the executives onstage overwhelm with ambitious assurances of technical prowess. Stadia’s complex cloud architecture will prevent the nasty networking hiccups that cause online gamers to throw down their controllers in frustration, Google’s representatives say. All gamers will need to do is open a tab in the Chrome web browser; with just a few clicks, they can play a high-speed, high-resolution title such as ­Assassin’s Creed Odyssey.

    Like their counterparts at Microsoft and Amazon, Google brass believe their vast data center empire gives them an edge on the technical demands of streaming high-end video game titles without interruption. Like its peers, Google has encouraged its consumer gaming and enterprise cloud groups to work together to ensure Stadia launches without the problems that have traditionally plagued online games.

    Thomas Kurian, a longtime Oracle executive who is now chief executive of Google’s cloud business, says the company’s enterprise engineers built the networking technology that powers Stadia. Cloud gaming is a way for Google to penetrate a ­multibillion-dollar industry, Kurian says. “Our hope is that it’s expanding the market, not just being a replacement market,” he says. “For every person in the world that games on a professional desktop, there are probably three who can’t afford one.”

    In other words: Why fight over a quarter of the market when the rest is greenfield? John Justice, a Microsoft veteran who now leads product development for Google Stadia, agrees. Gamers no longer want to “buy an expensive box every few years,” he says. Stadia, and services like it, are more accessible destinations to engage with games without the high barriers of entry found in the traditional console market.

    Even the pricing plays a part: Though Stadia’s $129 bundle plus $9.99 monthly subscription has already been announced, Google says it is also evaluating a free version, with lower-quality graphics, that would debut later. Though the technological trajectory is clear, it’s still “early days” for the business model behind cloud gaming, Justice says. “Some people really do want transaction models, and some people want subscription models,” he says. “I don’t think we will say we will only go with one.”

    It could take years to iron out the details. Though consumers would love a gaming model akin to Netflix or Spotify—pay a monthly fee, play titles to your heart’s content—it’s not yet clear that cloud providers have the leverage over game publishers to make that happen. Publishers have seen how platform pressures have changed the business of movies, music, magazines, and more. They don’t want to give up a share of their sales unless they’re certain that there are many more to be had in the long run.



    Ubisoft, the French publisher best known for the Assassin’s Creed series, isn’t terribly concerned. “That’s less interesting to us,” says Chris Early, an Ubisoft executive who manages partnerships and revenue. The company in June revealed its own subscription service, called Uplay+, that is playable on personal computers and spans more than 100 titles in its own catalog, including Far Cry and Prince of Persia. It costs $14.99 a month and will also be available on Stadia next year. At this moment, “it makes less sense for a publisher to be part of an aggregated subscription model,” says Early. There are many proposals for how to sustainably monetize cloud gaming, he adds, but it remains unclear “who is going to pay whom.”

    For now, publishers are focused on figuring out whether today’s successful titles make sense in the cloud—or whether all-new titles, native to the format, will replace familiar franchises. The interactivity of Twitch and the novelty of so-called freemium mobile games, like Candy Crush, showed that technological leaps could open new paths to gaming engagement. The possibilities that could emerge from running games on the same infrastructure that supports today’s artificial intelligence are something that technologists can only fathom.

    “There will probably be evolutions of game design that we can’t even imagine yet,” says Early, “and they’re going to take advantage of the increase of cloud compute.”

    Back in Redmond, I stop by Microsoft’s 343 Industries game studio, where employees welcome me to a visitor center—a shrine, really—celebrating the company’s Halo franchise, which has racked up $6 billion in sales since its debut. Statues depicting its heroes and villains tower over my head—a gallery of Greek gods, so to speak, for the gaming set. There are glass museum cases everywhere packed with memorabilia. On one wall is a rack of replicas of the virtual weaponry from the game, as intimidating in person as they appear on the screen. Bright orange tags with the word “prop” hang from their triggers in case someone takes the “incineration cannon” a little too seriously.

    Founded in 2007 and named after a Halo character, 343 Industries is one of the older members of the Microsoft game portfolio. Last year alone, Microsoft acquired six game studios; at this year’s E3 industry confab, the company announced that it had picked up one more. Today, its Xbox Game Studios division is a federation of 15 semiautonomous studios that the company believes will be a key asset in the cloud-gaming wars—particularly against Amazon and Google, which lack strong titles of their own.

    Not everyone sees it that way. Though Microsoft has won plaudits for successive editions of Halo and the Forza car-racing series, analysts have pointed to the titles’ relative age—Halo debuted in 2001; Forza first appeared four years later—as evidence that Microsoft’s homegrown studios have run out of ideas. “We have work to do there,” acknowledged Spencer, the Microsoft gaming chief. “We haven’t done our best work over the last few years with our first-party output.”



    Frames from Halo Infinite, the forthcoming edition of the sci-fi game series, and Forza Horizon 4, a popular car-racing series. Both are published by Microsoft. Courtesy of Xbox Game Studios
    ________________________

    That must change if Microsoft, the only video game veteran among the Big Three consumer cloud companies, hopes to maintain its natural advantage against Amazon and Google. After all, in video games, as in other parts of the media industry, content is king—which is why Microsoft’s rivals have moved to hire gaming veterans from top shops such as Electronic Arts (Madden NFL, Need for Speed) and 2K Games (Civilization, NBA 2K20) in an effort to build their own franchises. It is an uncanny echo of the moves by Amazon and Google to build their own premium programming, for Prime and YouTube, respectively, to compete with Netflix.

    But Rome wasn’t built in a day. Seven years after establishing a gaming group in 2012, Amazon laid off dozens of game developers as it reorganized itself for a cloud-based future. (Amazon downplayed the news. “Amazon is deeply committed to games and continues to invest heavily in Amazon Game Studios, Twitch, Twitch Prime, AWS, our retail businesses, and other areas within Amazon,” a spokesperson tells Fortune.)

    Van Dreunen, the SuperData analyst, believes it will take up to five years before cloud-driven efforts by the Big Three will significantly affect the traditional gaming industry. Until then, look for cloud computing’s leaders to continue investing in their data center infrastructure to support the “gradual rollout” of cloud-gaming services, he says.

    Why would Amazon, Google, and Microsoft make so much noise about a future that’s so far away? It’s all a part of the “land and expand” business model familiar to the technology industry, says analyst Pachter: Give a speech, plant a flag, hope that early momentum snowballs into an insurmountable competitive advantage. After all, “Facebook wasn’t a billion-dollar idea until it was,” he says. “Uber wasn’t a billion-dollar idea until it was.”

    Microsoft, in particular, has no intention of missing out. The company still regrets losing the mobile war to Google and its Android operating system. (Microsoft “missed being the dominant mobile operating system by a very tiny amount,” cofounder Bill Gates lamented earlier this year.) To underperform in an area where it has a head start of almost two decades would be, in a word, unconscionable.

    Time to suit up, then. “We’re in gaming for gaming’s sake,” Nadella says. “It’s not a means to some other end.”

    A version of this article appears in the August 2019 issue of Fortune with the headline "Big Tech's New Street Fight."

    https://fortune.com/longform/video-game-streaming/

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