Tuesday, January 19, 2010

IT's Perfect Storm: Where Smart Phones, The Cloud, and Virtualization Meet

Last month I cited a Morgan Stanley Report on the prospects for "the mobile internet."  Upon reflection, I believe  the Morgan Stanley view misses some of the key forces remaking the IT industry today.   I am now preparing a lecture series on this topic and would appreciate your thoughts.

Proposed Lecture Series: Information Technology’s “Perfect Storm”

Accelerating information technology is having a disruptive influence on our economy, but the underlying forces causing this disruption are yet to be identified and understood by the vast majority of business leaders, government officials, and technologists themselves.

Like the Perfect Storm, three fundamental technologies: smart phones, cloud computing, and virtualization; are changing the face of our society and changing business as we understand it. The greatest effects are most visible at the points where the three intersect and merge. This combination threatens massive restructuring not only in computing and information technology, but in financial markets, entertainment, news, politics, education, societal values, and in the very ways we come to learn and understand things (epistemology).

In a March, 2009 blog post, the iPhone as a Murder Suspect, this author attributed many of the following deaths to the ever evolving smart phone: phone booths, pay phones, the phone on the kitchen wall, landline phones, the home phone number, paper address books, the “ month at a glance” calendar, wristwatches, PDAs. Also threatened are airline boarding passes, paper coupons, TV remote controls, garage door openers, point and shoot cameras, Walkman and MP3 players, and handheld gaming devices

A very recent and extremely visible disruptive effect of this Perfect Storm was its impact on the market for handheld and dashboard mounted GPS devices. Smart phones with location detecting chipsets and large color screens can do everything that dedicated GPS units from Garmin, Magellan, and Tom Tom can do. Smart phones are leading this attack, with the Cloud providing reserve troops. By using the smart phone for directions and display, while accessing continually updated maps and directions from the Cloud, supplemented by traffic reports, weather updates, parking advice, and shopping information, the phone becomes a far superior functional device and its multi-purpose nature provides an insurmountable cost advantage over dedicated GPS devices.

Moreover, the low cost and ease of writing and distributing applications for the smart phone and Cloud encourages vast numbers of entrepreneurs to extend the capabilities of these technologies in yet-undiscovered ways. Google’s Q4 2009 introduction of a free navigation application wiped 16 per cent off the valuation of Garmin and 23 per cent off Tom Tom.

And the story will grow more dramatic. Our three technologies have a long history, but recent advances have brought them to the fore. These pivotal events over the past couple of years have wrought fundamental changes:

Smart Phones: The July, 2008 introduction of the iPhone 3G with its application library made the smart phone a true general purpose computing device. Within 16 months, developers had created over 100,000 apps for the revolutionary App Store, making it the world’s largest applications store. App Store users have downloaded well over three billion apps, clearly making it the world’s most popular applications store. Google just introduced its own smart phone, the Nexus One, in Jan., 2010. A variety of smart-phone like devices of varying sizes and capabilities, sometimes called netbooks or tablets, are being delivered this year.

Cloud Computing: The 2008 publication of “The Big Switch” by Nicholas Carr brought Cloud computing to public attention, Amazon had launched its pioneering service, the Amazon Elastic Cloud, or EC2, in August 2006, primarily to monetize the extra capacity Amazon had purchased to handle peak loads for holidays. Microsoft will introduce a competing service in 1st Quarter 2010. Other major cloud providers include Google and IBM, as well as several smaller companies.

Virtualization: First a bit of history - IBM’s mainframe based VM (Virtual Machine) operating system was the most versatile, responsive, and secure system of its day. First prototyped in 1966, the VM System required both special hardware features and its own software. VM systems developed for microprocessors were far less robust until 2006, when both Intel and AMD delivered chips that support a full virtual machine implementation. Now processors can run unmodified guest operating systems with minimal performance degradation. VMware’s IPO in August, 2007, brought these developments to the attention of the investment and user communities. Virtualization, in the form of Virtual Machines and Virtual Operating Environments, provides the technological foundation for Cloud Computing. It has been successfully demonstrated on smart phones, and provides the likely basis on which future business, government, and social applications will be designed and developed.

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