Thursday, August 11th, 2016

Time	Event
12:00p	How Renewable Energy is Changing the Data Center Market The big recent renewable energy push in the US by some of the largest data center providers can be attributed in no small part to rising interest in the market in colocation services powered by clean energy. While good publicity and the promise of energy cost savings sometime down the line are good enough reasons for a company like Google to commit tens of millions of dollars to renewable energy purchase contracts for its data centers, companies that provide various data center services to many users are working with a very different set of considerations. It just has to make business sense for them. The good news is that renewable energy for data center services does make more business sense today than it ever has, and that’s for two reasons. The first reason is that more and more of their customers have sustainability goals of their own, and customers that recognize data centers as a substantial part of their operation will look more favorably at a data center outsourcer that can offer them a renewable option. A recent survey of consumers of retail colocation and wholesale data center services by Data Center Knowledge, found that 70 percent of these users consider sustainability issues when selecting data center providers. About one-third of the ones that do said it was very important that their data center providers power their facilities with renewable energy, and 15 percent said it was critical. Most respondents said their interest in data centers powered by renewable energy would increase over the next five years. More than 60 percent have an official sustainability policy, while 25 percent are considering developing one within the next 18 months. Download results of the Data Center Knowledge survey in full:Renewable Energy and Data Center Services in 2016 The second reason is cost. At least on the wholesale markets, renewable energy has become price-competitive with fossil-fuel energy, and data center providers who are able to buy it on the wholesale market don’t necessarily have to pay much of a premium for it. Moreover, data center operators often secure long-term power purchase agreements (PPAs) with wind or solar plant developers at rates that are locked in for the duration of the contracts, protecting themselves from energy market volatility for many years. Customers Push Akamai to Switch Gears Akamai Technologies, operator of the world’s largest content delivery networks, is a good example of a major global customer of data center services that is now actively trying to figure out how to clean up the energy supply of its network, which spans many colocation data centers across close to 130 countries. Until recently, Akamai’s sustainability strategy relied primarily on improving energy efficiency. Efficiency was an easy sell internally, Nicola Peill-Moelter, who leads Akamai’s environmental sustainability efforts, said, because what business doesn’t benefit from being more efficient? Hedging against price volatility with renewable PPAs wasn’t much of an argument in Akamai’s case. While its network consists of about 200,000 servers, it is extremely distributed, most sites housing only a minimal footprint, she explained. Paying to most of its data center providers based on power capacity and not the amount of energy it uses, Akamai isn’t as exposed to energy price swings as some of the bigger energy users are. Enter customer demand. “We saw a rising percentage of our customers and also investor interest” in using services powered by renewable energy, Peill-Moelter said. Customers wanted Akamai to help them meet their own renewable energy goals, and the company decided to stay ahead of the competition and make renewable energy a feature of its services and a differentiator, which is a goal that’s much easier for management to sign off on, she said. This past May, Akamai announced a change in strategy, setting for itself the goal of powering at least half of its infrastructure by renewable energy in four years. It’s Complicated Four years may seem like a long time, but considering that renewable energy as a feasible product isn’t available from most utilities, let alone from most data center providers, four years isn’t long at all. Google spent years pushing Duke Energy, the largest utility in the US, to add a clean energy product to its portfolio and create a special tariff for it so that the internet giant could claim it is using renewable energy to power its data centers in North Carolina. When Switch, the Las Vegas-based provider that operates one of the world’s largest data center campuses, found a developer that would build a large solar farm in Nevada and sell it energy to power its data centers at a low-enough rate, state regulators blocked it from “unbundling” itself from the big Nevada utility NV Energy, instead forcing an agreement where NV Energy would buy clean energy from the developer at the low rate and resell it to Switch at a much higher one. In July, Switch filed a lawsuit against both the state and the utility, claiming the agreement is unfair. Read more: Why Data Center Provider Switch is Suing Nevada and NV Energy Because any company cannot simply go and buy or sell renewable energy on wholesale markets in any state, Google and Apple registered subsidiaries as energy companies so that they could have that flexibility. Securing enough renewable energy for any substantial data center operation seems to almost always entail a drawn-out and expensive process of negotiating with utilities and regulators and devising complex work-arounds. “I don’t think it’s an easy thing for [data center providers] to do,” Peill-Moelter said, but they have more of an incentive to figure it out “because their customers are pushing them to do it.” Her hope is that more providers will see renewables as a way to reduce exposure to price volatility of fossil-fuel energy, but that strategy will only work if data center providers don’t pass the cost of power to their clients (many of them do). Read more: Cleaning Up Data Center Power is Dirty Work Not All RECs are Created Equal Adding to the complexity is the many different ways for a data center operator to source Renewable Energy Credits. Some types are acceptable for customers like Akamai, and some aren’t. Google, for example, may buy energy from a wind farm, strip it of RECs and sell it as “dirty” energy on the wholesale market, while applying the RECs to dirty energy its data centers consume. The end result is still more renewable generation capacity added to the grid, since big long-term PPAs of the kind Google signs often help developers secure the financing necessary to build their renewable generation plants. You can also simply buy RECs on the market, which does little in terms of reducing overall reliance on fossil fuels. “If they’re going off and just buying national RECs, that doesn’t do us any good,” Peill-Moelter said. And other big colocation customers, such as eBay and Salesforce, are on the same page with Akamai about this, she added. She is involved in an effort to bring some standardization to the way colocation providers offer renewable energy-powered services called Future of Internet Power –one of the projects by an NGO called Businesses for Social Responsibility. The group is hoping to have a proposal drafted by the end of summer. They Just Want to Pay for What They Use In addition to the lack of regulatory and business frameworks for large-scale renewable energy purchases by big end users like data center operators, there are many internal problems at colocation companies that make it even more difficult for their customers to have strict control of the type and amount of energy they use in their facilities. As an energy-conscious customer, you need to have good data on how much energy you are using in a colocation facility, but there are many older colocation data centers that aren’t instrumented enough to provide that data, Peill-Moelter said. It is a common practice in the colocation industry to charge customers based on power capacity they use (cost per kW) rather than the amount of energy they use (cost per kW-hour). This problem isn’t limited to small mom-and-pop colos. “Pretty much every big colo provider does have data centers that can’t measure energy,” she said. Akamai has started pushing for metered-power colo contracts, but many providers just couldn’t offer that model. “They’re not eager to do that, but that’s changing; colos are getting the message.” Download results of the Data Center Knowledge survey in full: Renewable Energy and Data Center Services in 2016 (Comment on this)
5:03p	Alibaba Reaps Growth From Jack Ma’s Push Into Media, Cloud (Bloomberg) — Jack Ma’s diversification strategy is starting to pay off as revenue at Alibaba Group Holding accelerates to the fastest since its record initial public offering. Streaming entertainment and cloud computing bolstered a resilient e-commerce business, driving revenue up 59 percent in the June quarter, beating analyst estimates. The results drove the stock up as much as 6.2 percent to $92.77 in New York, the most in more than three months. Chairman Ma has spent billions of dollars buying video website Youku Tudou, Southeast Asian e-commerce company Lazada Group SA and web browser UCWeb to make Alibaba less dependent on a slowing domestic economy. That has combined with a push into cloud computing to generate new growth for a company that dominates online shopping in China, and is cashing in on the country’s shift toward services from heavy industry. “This quarter’s performance lifts investors doubt about its ability to maintain growth in its core e-commerce business,” said Li Muzhi, a Hong Kong-based analyst at Arete Research Services LLP. “The business diversification in digital entertainment and cloud is icing on the cake.” Sales for the quarter were 32.15 billion yuan ($4.8 billion) compared with the 30.2 billion-yuan average of estimates compiled by Bloomberg. Net income was 7.1 billion yuan, also beating expectations. The company’s annual active buyers increased 18 percent to 434 million. Adjusted earnings-per-share were 4.90 yuan. Alibaba’s main shopping service — the Taobao online marketplace — was still finding favor among the younger users crucial to engagement. Three quarters of the service’s users were under the age of 35, Vice Chairman Joseph Tsai told analysts on a call. Growth in users drove a 47 percent rise in revenue for the core commerce business to 27.2 billion yuan. The division posted adjusted earnings before interest, tax and amortization of 16.6 billion yuan. Still, Chinese retail e-commerce accounted for just 73 percent of Alibaba’s revenue, as Ma pursues a goal of getting half of sales from outside the country and in new sectors. And the company’s willing to spend to get there. More coverage of Alibaba’s data center strategy and cloud business here “While the other companies are talking about a billion investment, we are willing to invest multi times of that number,” Chief Financial Officer Maggie Wu said. The quarterly report is the first in which Alibaba has broken out earnings into division segments. The move toward more financial transparency comes after it disclosed in May an investigation by the U.S. Securities and Exchange Commission into the company’s accounting practices. As with Amazon.com Inc., Alibaba is positioning cloud computing as one of its faster-growing businesses, eyeing top share in Japan in two years and beefing up its presence in the Middle East and U.S. The cloud unit increased its base of paying customers to 577,000, driving a 156 percent leap in revenue. The division also more than halved its losses, and executives said it was now approaching break-even. “Our results show the scale and leverage of our ecosystem, as we strengthen our competitive positions in core commerce, cloud computing and digital media and entertainment,” Chief Executive Officer Daniel Zhang said. Revenue from media and entertainment almost quadrupled to 3.1 billion yuan while the innovation initiatives business, which includes its operating system and mapping service, posted a 30 percent jump. But losses from entertainment almost doubled as Alibaba spent more on content to lure customers to Youku Tudou and its fledgling over-the-top TV service. International retail commerce revenue more than doubled on account of Lazada, which granted Alibaba access to major Southeast Asian markets. Lazada, which at $1 billion is the company’s biggest overseas acquisition, was included in earnings for the first time and is expected to become a linchpin of Alibaba’s global expansion. The company on Thursday affirmed its target of 48 percent growth in full-year revenue. “Alibaba’s business has gone far beyond its original e-commerce business and evolved into a sophisticated ecosystem with far-reaching penetration into Chinese consumers’ day-to-day life,” Jefferies & Co. analysts led by Jessie Guo wrote before earnings were released. (Comment on this)
5:26p	The Rise of Business-Driven IoT Brought to You by IoT Institute Here are some common assumptions about the Internet of Things. Everybody wants in on it and, in the negative column, security and privacy are a nightmare. There are problems with those conclusions, according to Jerry Chase, CEO and Kevin Walsh, ‎Vice President Marketing at Bsquare. Sure, the IoT field is trendy, but that isn’t enough to entice most industrial companies to invest in it. “Our view is that nobody is buying IoT,” Chase says—or at least not the operations departments, P&L centers, and business unit managers at industrial firms that the company is targeting. He continues: “Instead they’re buying better business outcomes.” Furthermore, while security and privacy are hurdles, most of Bsquare’s industrial clients view those items like a box to check off rather than huge concerns. “I don’t think too many of [our customers] are all that concerned about security. It’s an interest for IT teams, but they already use standard protocols,” Walsh says. “It is a pretty tightly controlled secure environment. I think a lot of the alarmism is in the consumer space.” What keeps most operations people up at night is not IoT security but straightforward things such as solving business problems, fueling growth, and cutting waste. A big chunk of what the company does is to help companies improve what they were already doing. In some cases, they help them use technology to launch new business models. Curious about the impact of IoT on the data center industry? A panel of experts at the Data Center World conference in New Orleans in September will discuss IoT’s impact on networks, LANs and IPs, data, storage, bandwidth, power, and data management. The session is titled IoT and Its Impact Everywhere. Click here to register for Data Center World Business over Platforms Earlier this year, several journalists and investors asked Bsquare’s executives if the company was planning on offering its DataV software stack as a platform. “In fact, we were challenged that we were not going to be viable in the space unless we offered a platform that could attract the development community,” Chase says. “We said: ‘gee, that is just not what we are seeing.’ First off, we have no objection to offering up DataV as a platform. None. We would be happy to do it, but there is no demand for it.” There is no appetite because the company’s operations-based customers don’t have the resources or desire to develop software. “They don’t want to learn our business. They want to optimize their business,” Chase says. “So when you offer them a cloud-based solution with lots of APIs, it is just overwhelming for them,” he adds. Walsh notes that the company often doesn’t discuss things like APIs and protocols with its customers. “If you are talking to operations people, their vocabulary is “uptime,” “reduced maintenance,” “reduced service cost,” or “reduced warranty costs.” “Fortunately, we are just at a stage in the development of industrial sector where it is operations that are leading it. They are the ones looking for an ROI,” Walsh says. “IT departments, in most companies, are not leading this charge.” Nevertheless, Bsquare sees many companies implementing IoT technology simply because it seems like a good idea. “If you start off by saying: I want to implement an IoT solution, it is kind of like an experiment,” Chase says. “Operations people don’t have time for that.” Turning Data into a Business Advantage Bsquare’s strategy has proven successful thus far. The company just signed a deal worth more than $4 million with a Fortune 500 company. 451 Research believes the company is one of the top five providers and that they were one of the top IoT companies in the marketplace. “We are feeling pretty good,” Chase says. An example of how the company can help boost efficiency can be found in the trucking industry. “There is a great example of a targeted use case in the trucking industry where the primary goal is uptime,” Chase says. “If those wheels aren’t turning, those customers aren’t making money. There is a big opportunity cost if that truck is broken down by the side of the road or waiting to get into a repair bay.” In this case, the company is taking data from the truck and processing it with its algorithms. Bsquare creates business rules with probabilities associated with them. “This allows the operations people to decide what they want to do when a business rule is triggered,” Chase explains. “Do they want an email sent? Do they want to query the driver? Or tell the driver to ignore the indicators because the warning isn’t that serious. Or do they want to route the truck to a repair center that is seven miles farther than the nearest one because that center has the time and the parts.” Walsh says that he foresees the predominant use case for trucking and for consumer automobile industries being predictive reasoning. “You want to know two or three weeks ahead of time when something is going to go wrong,” he says. “It would be great if we could drive our car to the repair shop and they already knew what was wrong because they already were able to do the diagnostics and the analytics beforehand.” But a repair shop still diagnoses the problem after the vehicle arrives—oftentimes after hooking it up to a computer that is in the shop. “That is ridiculous. Obviously, for trucks, it is not only ridiculous but very expensive to do that. That is why you see big institutional heavy-duty trucking manufacturers implement this more quickly than consumer automobile manufacturers.” IoT technology also can be used to reduce the trucking industry cut waste. “We discovered that the false positive rate for internal indicators on a truck is very high—it’s a double digit percentage. Reducing that figure could lead to enormous savings, Walsh says. “When a trucking company pulls a truck off the road, in addition to lost revenue, it cost more than one thousand dollars just to pull the vehicle into a service bay.” Pitches like these are persuasive for industrial companies. “If I work at a company like this, and you have something that can help me with my business, I am interested,” Chase says. Once they hear the pitch, they tend to want to launch a proof of concept study to see how the technology can help address their challenges. In interactions like this, the nature of the interaction begins to change. “You go from being a technology vendor to being a trusted partner,” Chase says. Curious about the impact of IoT on the data center industry? A panel of experts at the Data Center World conference in New Orleans in September will discuss IoT’s impact on networks, LANs and IPs, data, storage, bandwidth, power, and data management. The session is titled IoT and Its Impact Everywhere. Click here to register for Data Center World This first ran at http://www.ioti.com/iot-strategy/rise-business-driven-iot (Comment on this)
5:41p	Public Cloud Spending to Reach $195B by 2020: IDC Brought to You by The WHIR Global spending on public cloud services will reach $195 billion by 2020, according to the latest forecast from International Data Corporation (IDC). The Worldwide Semiannual Public Cloud Services Spending Guide, published Wednesday, forecasts $96.5 billion of spending this year, and a 20.4 percent compound annual growth rate from 2015 to 2020. The report shows that 16.3 percent of public cloud spending in 2015 was on IaaS, with cloud software accounting for the remaining 83.7 percent. It further divides cloud software into applications-as-a-service and system infrastructure software (SIS), which make up SaaS, and application development and deployment (AD&D), also known as PaaS. Infrastructure and platform revenues are expected to grow faster, however, than SaaS. “Cloud software will significantly outpace traditional software product delivery over the next five years, growing nearly three times faster than the software market as a whole and becoming the significant growth driver to all functional software markets,” said Benjamin McGrath, senior research analyst for SaaS and Business Models at IDC. “By 2020, about half of all new business software purchases will be of service-enabled software, and cloud software will constitute more than a quarter of all software sold.” See also: Top Cloud Providers Made $11B on IaaS in 2015, but It’s Only the Beginning “Discrete” manufacturing (meaning manufacturing of countable finished products), banking, and professional services are the industries leading public cloud spending, representing a third of the total in 2016. All 20 industries studied, however, will more than double in revenue generated for providers over the study’s 5-year term, and media, telecommunications, and retail will lead spending growth. The US will remain the leading regional market for public cloud revenues, while the greatest revenue growth will be in Latin America and Asia-Pacific excluding Japan. As among industries, spending in  all 8 regions will grow by over 100 percent. In 2013 IDC forecasted public cloud spending would reach $47.4 billion in that year, and $107 billion in 2017, which fits observed spending and continuing trends well enough to lend additional credence to the forecasts released this week. The report is also generally supported by research released by Synergy in 2015 that showed managed enterprise services making up over half of close to $22 billion in quarterly revenue, and an IDC report from earlier this year which showed infrastructure sales to public cloud reached $4.6 billion in Q3 2015. This first ran at http://www.thewhir.com/web-hosting-news/public-cloud-spending-to-reach-195b-by-2020-idc (Comment on this)
6:00p	Linux Foundation Adds Open vSwitch to Open Source Networking Portfolio By The VAR Guy Open vSwitch (OVS) has come under the direction of the Linux Foundation, bringing another major open source networking project under the umbrella of the group already overseeing projects like OPNFV and OpenDaylight. OVS is a platform for virtual network switching. That means it provides the functionality that servers need in order to mimic physical switches within a virtualized environment, saving organizations from having to purchase costly dedicated switching hardware. The project is governed by an Apache license. OVS has operated as an independent open source project since its founding in 2009. This week, however, it became a Linux Foundation project, bringing it under the governance model of other major open source networking initiatives that have already joined the Linux Foundation. The Linux Foundation says the move will help advance OVS development while also assuring the future of an important open source project. “OVS is a great example of how open source software has enabled the networking industry to match the pace of cloud computing and help advance virtualized technologies,” said Jim Zemlin, executive director, The Linux Foundation. “Hosting OVS as a Linux Foundation Project will serve to further collaboration across users and vendors and aid in open technology development throughout the networking stack.” See also: Linux Foundation Backs HPE’s Open Source Switch OS Partners The channel is welcoming the news, too. IBM’s Director of Open Source Networking, Kyle Mestery, called OVS “a critical piece of technology to help developers and their businesses move to a software defined and cloud development world” and said the Linux Foundation’s guidance will help to accelerate “adoption efforts even more through open collaboration.” VMware and Cisco, despite developing commercial virtualization and networking products, also celebrated the change. “Giving OVS a formal home within the Linux Foundation is a great way to ensure continued investment and community participation in this important open source project,” said Bruce Davie, Chief Technology Officer, Networking, VMware, Inc. Thomas Graf, Cisco’s Principal Software Engineer, said “the Linux Foundation will make for an excellent umbrella for the highly collaborative OVS project with a community-based technical leadership model similar to the Linux kernel.” For the open source ecosystem as a whole, OVS’s transition to being a Linux Foundation project underlines how central a role the Linux Foundation is now playing in directing the development of major enterprise-grade networking platforms. Again, the organization, which was founded in 2007 primarily to oversee development of the Linux kernel, has already taken the reins of several other open source networking projects. OVS adds another important niche — multilayer network switching — to the group’s purview. This first ran at http://thevarguy.com/open-source-application-software-companies/linux-foundation-adds-open-vswitch-open-source-networking (Comment on this)

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