At Microsoft NZ's cloud launch, a jab at Southern Cross Cable

Yesterday, Microsoft New Zealand officially launched Azure, a new “cloud” platform, tackling tricky price and trust issues head on.

Under a cloud setup, your software, and your data, is hosted not within your own network but at a data centre in the cloud (that is, accessed via the internet; in this case, one run by Microsoft in the US or Singapore). You can rent computing power, and storage – or ditch it – as required.

Around 350 IT professionals packed Auckland's Sky City Convention Centre to hear David Chappell (pictured), an independent software development consultant parachuted in from San Francisco to keynote the event.

Southern hemisphere price shocker
Microsoft Azure's data pricing for Asia Pacific users, including New Zealand, is $US0.30 per gigabyte in, and $US0.45 per gigabyte out – or three times what US and European customers are being charged.

Mr Chappell said “Microsoft is just passing through the cost”.

The higher Asia Pacific charges were “in part because of distance, but a lot due to telecom monopolies. Can you fix that?”

A single fibre connection runs out of New Zealand, run by the 50% Telecom-owned Southern Cross Cables Network.

Other charges include $US0.15 per gigabyte per month for storage, and $US9.99 per gigabyte per month for relational database storage, and $US0.12 to .$US0.96 per hour for computing, depending on processor and memory requirements.

Landing with a FUD
"With Azure, Microsoft is taking a gamble that organisations want to gain the efficiency, scalability and economics that Amazon and other have bought by way of cloud computing," said Ben Kepes, principal of Diversity Analysis and an industry commentator.

"They're also figuring that larger organisations will have more faith buying these services from a 'trusted' provider such as Microsoft," Mr Kepes told NBR.

"While their local pricing is high, it's significantly cheaper than self-provisioned infrastructure.

"As such Microsoft can make super-normal profits in the short to medium term and only need to start competing on price when there's a real need to do so. Until then, they'll pitch themselves as the 'trusted cloud provider' and market Azure as such - FUD [fear, uncertainty and doubt] wins the day."

A crowd of around 350 software developers and other IT professionals turned up to hear Microsoft's cloud message.

Cheats, liars
Only you can decide if cloud computing is cheaper than on-premise computing for your organisation said Mr Chappell, though he also couldn't resist a little dig at the old-school crowd. Don't trust your own IT department to give you a realistic assessment of “on-prem” costs, said the consultant, because they have an incentive to lie. That would be losing jobs, and power, to the cloud.

Fail fast and cheaply
Mr Chappell told the audience, many of whom were software developers, that the Azure platform democratised access to powerful computing.

It suited start-ups, who could “fail fast and fail cheaply, leaving money for your next dumb idea”. Or, if things worked out, scale fast.

It also suited applications with an unpredictable lifespan – say, a marketing campaign that might last one month or six, depending on how customers react.

Or apps like online ticketing where traffic could come in surges, but people didn't want to shell out for their own infrastructure.

Financial modelling and other apps that required huge processing grunt, but only for short periods, was also friendly to cloud computing's rent-power-by-the-hour approach.

The trust issue
Trust was the single biggest issue he came across when trying to persuade audiences of cloud computing's benefit's, said Mr Chappell: “Why put my data in a centre in Singapore owned by someone else?”

Microsoft is a little late to the cloud computing party. Others, notably Amazon with its Elastic Compute Cloud or EC2 service (represented in New Zealand by Fronde, which also acts as an agent for Google's corporate solutions).

One benefit, is that people have already started to build trust in cloud computing platforms, and the software-as-a-service (SaaS) products that run on top of them. Mr Chappell name-checked Salesforce.com, which has become a $US11 billion market cap company with a SaaS service that puts sales leads and product pipelines in the cloud – among the most sensitive data imaginable.

It was against the law for business and government agencies to house data offshore in many instances, Mr Chappell said.

But, equally, many governments also increasingly had a ongoing projects to share public data (such as New Zealand's Open Data initiative), or even an obligation to do so in many areas. Cloud computing was a perfect match when this was the case.

At the other end of the scale, many companies would never want to put their most secure data in the cloud, said Mr Chappell. But most data sat between these two extremes.

Azure vs Amazon
Mr Chappell said that Microsoft Azure gave developers less control over their software than Amazon's EC2, but the trade off was that Amazon's product required more administration.

Still, in some instances, you have to be hands-on with Azure.

Azure would not “automatically spin up more VMs [virtual machines]” if one of your applications required more computing power, he said, “but it gives you APIs to spin them up yourself.”

The Bangalore analogy
Returning his trust theme, Mr Chappell said 25 years ago, noone would have dreamed of outsourcing software development and other IT services to India.

But by doing their job well – and crucially, cheaply – developers in Bangalore slowly started to win respect.

Cloud computing would go mainstream for the same reasons, said Mr Chappell. For being cheaper than alternatives, and proving itself trustworthy.

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1 Comment & Question

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<strong>Cloud</strong> n. Unsubstantial or fleeting thing

Why does the AZURE traffic have to leave NZ? There are plenty of datacentres in NZ that MS could host their "cloud" on.

Traffic would be;
* local (gets around gov't security/access/control/interception issues)
* cheap (it is not travelling over expensive int'l circuits)
* faster (low latency due to local hosting)

So if MS invested in the NZ market, to support it's local clients (who will be paying for these services) then the issue would not be "clouded" with BS about int'l circuit pricing.

Or is the real issue that cloud providers in the USA are positioning themselves as the holders of the <strong>desirable</strong> content (i.e. <strong> Your own data - that you will then have to keep paying to access</strong> hosted in the USA) which they will eventually seek to sell to the transport companies - then seek to blame them for the high(er) cost of traffic carriage?

I seem to remember marketing predictions in the mid '90's that predicted "free" internet that would be funded by content providers who wanted to deliver their content to your door. Seems we now have the opposite. Content providers want to charge both ends of the delivery chain. <strong> No, surely the thought never crossed their monds when dreaming up their cloud(y) strategy.

The sooner MS / Google et-al pay their fair share of carrying traffic around the internet then the <strong>fairer</strong> your retail traffic charges will become.

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