Hype Series Part II: Let’s Start Looking Beyond the Hype Peak

In Part I of this Hype Series, I introduced the Gartner Hype Cycle (below) which is a new visual tool used by analysts to describe technology adoption. I also presented the Emerging Technology Hype Cycle charts for the Gartner group’s 2008 and 2009 report. In 2008, Gartner believed that The Cloud was in the upward slope of the Technology Trigger section, while in 2009 they thought that the Cloud had progressed to the top of the Peak of Inflated Expectations.

During 2009, I heard many mentions of the Gartner Hype Cycle as it related to the Cloud. At the recent HostingCon 2009 in August, there were mentions of the Hype Cycle during a Cloud panel discussion. One speaker said that the Cloud was “clearly over the hype peak” but I don’t recall who the speaker was. (Perhaps someone can let me know.)

Rob Walters of the Data Protection and Storage in Marketing, Servers and Solutions of ThePlanet took a stab at positioning the Cloud and other hosting segments on the Hype Cycle in an April 2009 company blog post. Then more recently – in October 2009 during the cPanel conference – Todd Mitchell, GM Dedicated Servers and Global Services at ThePlanet, discussed the very same Hype curve in his presentation on Disruptive Technologies. ThePlanet argues that the Cloud is in the Technology Trigger section of the Hype Cycle while virtualization has passed over the Hype peak.

So from all these different perspectives – technology analysts, Cloud service providers, and dedicated and managed hosting providers – “The Cloud” resides on the hype cycle somewhere in area as circled in gray above. But for me, it is not so interesting to discuss whether the Cloud is over the hype peak or on its way to reach the hype peak. I think that there are two topics that are much more interesting and deserve more attention.

How Deep the Trough
As emerging technologies get over the peak, they move downward toward the Trough of Disillusionment. I have not heard of much discussion yet on how deep or shallow this trough will be. Let me provide a crude visual of what I mean by this in the next plot.

The Cloud service providers claim that everyone will be moving to the cloud abandoning their in-house IT services or their current outsourced hosting services. Some have predicted the decimation of the shared hosting enterprise within 5 years.  Rackspace even started a nomoreservers.com microsite to support this vision. If this is the case, then the adoption should be fast, and the trough will be shallow.

However, on the flip side, if using the Cloud requires a lot of complex reworking of existing code, or if there are any more high-profile Cloud outages or catastrophic failures, the trough may be deep.

How Slow the Rise
The second topic that interests me is around how fast or slow Cloud Computing will mature during the Slope of Enlightenment. Let me again show a crude visual of what I am referring to below. The question here would be; how comfortable will users and businesses be in moving their IT to the Cloud? Gartner puts mass adoption of Cloud Computing 2-5 years away, according to the 2009 Hype Cycle report. Is this the right ballpark?

So let’s look at 2009 and some of the events that occurred with “the Cloud.”

– In the past year there have been many Cloud outages: RackSpace Cloud, Azure, Amazon EC2, Salesforce.com, Google, Sidekick, PayPal, and Twitter all had well publicized outages. How elastic and highly available is the Cloud? Even our payment gateway, Authorize.net had a major outage this year taking our ordering and billing system down along with all the other tens of thousands of vendors who use them for credit card processing.

– At the recent HostingCon 2009, Tier1 Research’s Phil Shih, Research Analyst for Mass-Market Hosting, during his presentation on “Following Web Hosting Trends” stated that their research is showing that the Cloud’s potential revenue projection is actually a lot less than what is being stated by the rest of the Cloud industry at large.

– Technology trend-watcher and author of the Strategic News Service, Mark Anderson, in his annual Ten Predictions for the new year, predicts that there will be a major Cloud catastrophe in 2010. If true, this would severely deepen the trough.

– A recent Forrester Research Cloud Computing Survey results show concerns about security of cloud environments top the reasons for businesses not moving to the Cloud.

– Oracle (owner of Sun and mySQL) CEO, Larry Ellison, went on and on at the Churchill Club in an amusing rant on how there is no such thing as Cloud and called it “water vapor” (see video here). He makes some good points though – a lot of what people are now calling Cloud service, is exactly what vendors have been doing for years and years. It’s just got a new hyped up name.

– On the flip side, Jeffrey M. Kaplan of ecommercetimes.com, lists many flash points of how fast Cloud Computing has evolved over 2009. For example, Salesforce.com surpassed $1 Billion in revenue, showing that the Cloud business model can work . . . extremely well. And this company does everything in the Cloud – not just provide SaaS services but runs their entire organization (HR, internal documents, etc.) using the Cloud.

– At PDC09, Microsoft announced the launch of Microsoft Azure (in January 2010) along with surprising partners like WordPress, and introduced a promising data access service, Microsoft Dallas.

– According to Gartner, worldwide cloud services revenue will surpass $56.3 billion in 2009, a 21.3% increase from 2008 and the market is expected to reach $150.1 billion in 2013.

– Federal, State and City governments are starting to leverage the Cloud. For example, Federal CIO Vivek Kundra championed the launch of apps.gov, to provide an easier way for agencies to acquire infrastructure and applications, including an online storefront where federal agencies can purchase hosted services.

What to make of all this? My opinion is that there is a shift happening here driven by innovations in computing power, virtualization, and software. But I think it’s more evolutionary than revolutionary. The adoption will be much slower than what analysts and Cloud services are projecting. I don’t think that entire hosting segments are going to disappear. I also think that there is a lot of “Cloud-washing” (similar to green-washing and maybe a future blog post topic) going on as vendors try to jump on the latest hype.

I’ve stated in my previous posts that the customer base for hosts will shift as the Cloud matures, but each hosting segment/niche will be used for the workload that best suits their hosting environment because no hosting segment will fit all the needs of all users. Our challenge as well as all other hosts, is to continue to innovate and identify the workloads that best suits our hosting platform and service the customers that choose our hosting platform well.

I’m not saying that I know what is going to happen in the future. Only time will tell. The purpose of this post is merely an attempt to refocus the discussion to look beyond the “hype peak”.

Takeshi Eto
VP Marketing and Business Development