Report: A checklist for stacking up IaaS providers

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IaaS pic #2
A checklist for stacking up IaaS providers by Janakiram MSV:
Infrastructure as a Service (IaaS) is the fastest growing segment of the cloud services market. According to Gigaom Research, the current worldwide cloud market is growing by 126.5 percent year over year, driven by 119 percent growth in SaaS and 122 percent growth in IaaS.
Irrespective of the workload type, the key building blocks of infrastructure are compute, storage, networking, and database. This report focuses on identifying a set of common features for each of the building blocks and comparing them with the equivalent services offered by key players of the IaaS industry. The scope of this report is limited to public clouds and it doesn’t compare private cloud providers offering IaaS.
This report doesn’t attempt to compare the price and performance of the cloud service providers. The IaaS players are dropping their prices so frequently that the captured snapshot would be obsolete by the time this report is published. Since each workload, use case, and scenario differs from customer to customer, providing the technical benchmarking information is not practical. It’s best to pilot your app on several clouds and see what actual performance you get.
To read the full report click here.

Report: Hybrid application design: balancing cloud-based and edge-based mobile data

Our library of 1700 research reports is available only to our subscribers. We occasionally release ones for our larger audience to benefit from. This is one such report. If you would like access to our entire library, please subscribe here. Subscribers will have access to our 2017 editorial calendar, archived reports and video coverage from our 2016 and 2017 events.
Data - generic
Hybrid application design: balancing cloud-based and edge-based mobile data by Rich Morrow:
We’re now seeing an explosion in the number and types of devices, the number of mobile users, and the number of mobile applications, but the most impactful long-term changes in the mobile space will occur in mobile data as users increasingly interact with larger volumes and varieties of data on their devices. More powerful devices, better data-sync capabilities, and peer-to-peer device communications are dramatically impacting what users expect from their apps and which technologies developers will need to utilize to meet those expectations.
As this report will demonstrate, the rules are changing quickly, but the good news is that, because of more cross-platform tools like Xamarin and database-sync capabilities, the game is getting easier to play.
To read the full report, click here.

Report: How to resolve cloud migration challenges in physical and virtual applications

Our library of 1700 research reports is available only to our subscribers. We occasionally release ones for our larger audience to benefit from. This is one such report. If you would like access to our entire library, please subscribe here. Subscribers will have access to our 2017 editorial calendar, archived reports and video coverage from our 2016 and 2017 events.
Cloud computing
How to resolve cloud migration challenges in physical and virtual applications by Paul Miller:
Enterprise IT infrastructure largely predates the emergence of cloud computing as a viable choice for hosting mission-critical applications. Although large organizations are now showing real signs of adopting cloud computing as part of their IT estate, most cloud-based deployments still tend to be either for new and self-contained projects or to meet the needs of traditional development and testing functions.
Compatibility, interoperability, and performance concerns have kept IT administrators from being completely comfortable with the idea of moving their complex core applications to the cloud. And without a seamless application migration blueprint, the project can seem more of a headache – and risk – than it’s worth. This report will highlight for systems administrators, IT directors, cloud architects, and decision-makers at Software as a Service (SaaS) companies and Cloud Service providers, the different approaches they can take in moving existing applications to the cloud.
To read the full report, click here.

With Dropbox Groups, businesses can finally sort folders based on departments

Dropbox is rolling out a new feature called Groups and a related API that should make it easier for businesses to manage all of their content stored in Dropbox, the file-sync-and share company is set to reveal on Thursday.

The new feature is now available for Dropbox for Business customers and was supposedly the most requested feature Dropbox customers — now hovering at over 100,000 businesses — were calling for, explained Dropbox product manager Waseem Daher in an interview.

Groups supposedly lets users create folders that only members of the appropriate group should have access to. The idea is that businesses can set up folders based on their departments and then assign the right staff members to those folders, said Daher. Now, marketing departments can create folders that contain their related documents and only sales and marketing staff should be able to touch them.

If a company hires a new salesperson, that new employee will “just need to be added to the sales group and they will automatically get access to all the content they need for the job,” said Daher. The new Groups interface will supposedly give IT administrators a central hub to manage all those employees in one place, and if a company wants, it can set up group owners with the ability to manage those folders as opposed to only IT staff.

The new Group API that’s also being released is similar to the recently launched Dropbox for Business API in that the API will give developers a chance to create custom applications or modifications to the new Groups feature per the needs of their organizations.

Daher said the biggest feature developers could create with the new API would be a custom integration with their organizations’ active directory, which some IT admins use to keep track of where all their company resources, user data and related items are be located.

Additionally, a bunch of identity-management and security startups — including Okta, OneLogin and Ping Identity — are all working on their own integrations with the new Group API, which makes sense because these startups are aiming to protect companies from rouge employees who may try sneaking into places they shouldn’t be. All of these startups have some sort of integration with active directory as part of their own technology, so the hope is that with the Group API they can just “mirror that right into Dropbox,” said Daher.

The new Groups feature is another example of how Dropbox has been busy morphing from a cloud storage repository into more of a workplace hub, similar to the company’s rival Box.

For these cloud storage startups to grow and court big enterprise clients, they need to show that they have more to offer than just a place to hold documents, as exemplified by the similar file-sync-and-share startup Egnyte moving into the data analytics space.

Box buys small security startup to court more risk-averse clients

Fresh off its IPO in January, Box has made its first acquisition of the year, buying a small security startup called Subspace, the company said on Wednesday. Financial terms of the deal were not disclosed, but all seven Subspace employees will be joining Box and the startup will be closing up shop by April 3.

Subspace touts a supposedly secure browser that connects to a corporate network, whether it be on-premise or cloud-based. The browser is hooked up to the Subspace cloud-based backend where an organization’s IT staff can control access and craft data-protection policies for the websites and applications that a user might visit within the Subspace browser.

?In a blog post on the acquisition, Box CEO Aaron Levie wrote that the Subspace staff will be working on Box’s data security efforts and “will let us go even deeper with our security and data policies, enabling reliable corporate security policies, even when content leaves the Box platform to be accessed on a customer or partner’s device.”

As [company]Box[/company] continues to push its new Box for Industries product lineup, its going to need more security features to court customers who may be paranoid of cloud offerings. The types of customers Box wants to sign up for Box for Industries are the types of clients found in heavily-regulated industries like healthcare, finance and legal. So far, Box has made public that Stanford Health Care, [company]Eli Lilly[/company], T Rowe Price and Nationwide Insurance all feel comfortable with using Box as their work/cloud storage hub.

In February, Box rolled out the Box Enterprise Key Management (EKM) service, which lets users hold on to their encryption keys while using the Box platform. Box partnered up with the company SafeNet as well as [company]Amazon[/company] Web Services to help customers set up the service.

Do you use Gmail and Dropbox? Get this free, new extension

Even though I’m a Chromebook user with 1 TB of free Google Drive storage, I have multiple cloud storage accounts. That’s mainly for redundancy, but of course it can add complexity: Sometimes I’m not sure which cloud provider has what files or I have to open multiple tabs to get at a file I want to attach to an email.

Enter Dropbox for Gmail: A Chrome extension that adds a Dropbox button to the Gmail Compose screen. As long as you use Chrome for your browsing needs, the extension should work, so it’s handy regardless of your operating system, whether it’s [company]Microsoft[/company] Windows, [company]Apple[/company] Mac OS X, or [company]Google[/company]’s own Chrome OS.

One installed, you’ll see a Dropbox button in Compose screen when writing a new message in Gmail. Click the button and you’ll see all of your Dropbox files so you can choose to attach one or more of them to your message; there’s also a search function to help you sort through your Dropbox drive.

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Dropbox for Gmail inserts links to the files on Dropbox, not the actual attachments. Your message recipients will see a preview of the linked files so they get an idea of what you’ve attached before they even click the link and download the files.

Levitation program tracked file-sharing sites, Snowden doc shows

The Canadian spy agency CSE monitors activity across over 100 free file upload sites, a newly-revealed PowerPoint document from NSA whistleblower Edward Snowden’s cache has shown.

The document describing CSE’s Levitation program was published on Wednesday by The Intercept, reporting alongside Canadian broadcaster CBC. Although Canada has long been known to be a member of the core Anglophone “Five Eyes” spying club, this is the first Snowden revelation putting it at the forefront of one of the Eyes’ mass surveillance programs.

Using an internet cable-tap program called Atomic Banjo, CSE’s agents were at the time of the presentation’s authoring collecting HTTP metadata for 102 cyberlocker sites, including Sendspace and Rapidshare, and tracking 10-15 million “events” each day to find “about 350 interesting download events per month.” And yes, this meant filtering out loads of TV shows and such.

According to the presentation, the technique yielded a “German hostage video” (the hostage was killed, according to The Intercept) and an “AQIM [Algerian al-Qaeda] hostage strategy”.

In total, there were 2,200 file addresses that effectively acted as traps once CSE had identified them. Once the agents have an IP address for someone downloading a suspect file, they then run a query on it through GCHQ’s Mutant Broth tool to see which ad cookies have been tracking them (insecure marketing technologies provide an easy vehicle for spying efforts), what their likely Facebook ID is, and so on.

SendSpace told CBC that no-one had permission to trawl its service for data, and internet policy lawyer Tamir Israel told the broadcaster that the program was potentially very intrusive, as CSE (known until last year as CSEC) could pick whichever documents it wanted.

Sorry, Box, but free is not a business model

Free is not a sustainable business model. Everyone knows this, especially those who lived through the dot-com bubble 15 years ago. Everyone, it seems, except for cloud storage investors. Billions of dollars have been poured into cloud storage companies that are giving away their product, with just a tiny sliver of their customer base actually paying for anything.

Offering a free version of your product is nothing new for technology companies, but those who are successful at using this model either give the customer a strong incentive to upgrade to a paid version, or they do as [company]Google[/company] has done and create a massive audience that can then be sold to advertisers. The most popular and heavily-financed cloud storage companies do neither.

Venture capitalists have invested more than $400 million in [company]Box[/company], a cloud storage file sync and share company, and assessed its value at $1.2 billion. Its much delayed IPO ultimately did better than anticipated, pricing above the expected range — even though only about 10 percent of its customers pay anything at all. Unlike Box, Dropbox is not a public company and has never filed for an IPO, so its financials remain private, but it has raised $1.1 billion in financing, $500 million of which is debt, and is valued at around $10 billion. It too has said that most of its customers use the free product.

Mission: Converting users to customers

With Box, a free personal account provides 10 GB of space, plus the ability to sync and share files with other Box users. Similarly, Dropbox offers 2 GB of free space, with the potential to earn up to 16 GB by referring new customers. Just 1 GB of storage will hold more than 15,000 Word documents, on average, and more than 300 images.

Ideally, the free product offers not only enough value to spread virally, but also offers a strong incentive to upgrade so that it sells itself. Unfortunately for Box and Dropbox, the free services more than cover the needs of customers, which is why it should come as no surprise that about 9 in 10 of Box’s customers don’t pay, according to its SEC filings.

What’s more, Box is paying about as much money as it makes to win those paying customers. For the nine month period that ended Oct. 31, 2014, Box brought in $153.8 million in revenues, while spending $152.3 million on sales and marketing alone. Its total net loss for the nine month period was $129 million. If Box has to spend almost everything it makes from current customers to win new ones, what is the use of giving its product away for free, aside from boosting the size of their user base to impress investors? After all, the entire purpose of giving the product away is to introduce people to the product and then entice them to buy. Simply put, Box went public because it had no other choice. It needed another big cash infusion to pay for its losses.

Dropbox’s financial results are not public, but given how similar its model is to Box’s and how much more money Dropbox has raised, there’s little reason to believe that they are significantly different. After all, the more money a company raises, the more of the company the founders have to sell, and no founder enjoys parting ways with equity. The only reason for Dropbox to raise that much money is because the company needs it.

Why pay if you don’t have to?

The marketing value of “free” is minimal in terms of real dollars if very few of those users convert to paying customers. And, more importantly, Dropbox and Box still have to support all those non-paying customers. There is simply no palatable way for them to eliminate free users, and the costs associated with them will continue to rise as the need for storage increases. As more free customers are added into the system, those costs continue to grow, creating a death spiral. Last year, in an effort to increase the number of paid customers, Dropbox reduced the price of a gigabyte of storage by 90 percent. That is a clear indicator that, over time, the price of cloud storage will continue to reduce to zero.

Eventually, these competitive pressures will likely force Dropbox and Box to invest heavily in building their own storage clouds, but that’s a losing game as well, as Nirvanix discovered much to its chagrin last year. Nirvanix had raised $70 million to build a storage cloud to compete with Amazon, Azure and Google. It sealed big partnerships with IBM and Dell, and had won customers like NASA, Fox Sports and National Geographic. But in the end, Nirvanix couldn’t keep up in the ruthless price war between the bigger, commodity cloud storage giants. When Nirvanix abruptly announced it would shut down, customers had mere weeks to move terabytes of data out of their system.

Eventually, investors will cut off the spigot, and, unless they change course, companies like Box and Dropbox will die like Nirvanix.

So, how can these free sync-and-share companies avoid disaster? The most likely scenario is acquisition by a large software or systems vendor who would ultimately integrate this sync and share functionality into their own products as a major feature. To thrive as independents, however, sync and share companies will need to do two things: move beyond a business model built on free and create a more robust and valuable product offering.

It’s not that sync-and-share isn’t valuable — it is! I personally use Dropbox almost every day. But sync-and-share is quickly shrinking from a stand-alone product into just one feature of a much larger integrated workspace. If these companies can create a compelling service that integrates communications, collaboration and project management into a single, intuitive environment, they may have a future. Box is clearly already moving in that direction, but both companies will need to do much, much more if they’re going to win against companies like Slack and their numerous competitors and outpace their own prodigious burn rates.

Finally, these new products will need to provide ample incentives for customers to pay. Having a lot of “customers” that don’t pay you anything is the surest way to repeat a lesson we were all supposed to have learned after the dot-com bubble burst. That lesson was painful enough the first time, and there should be no need to repeat it.

Andres Rodriguez is CEO of Nasuni, a Natick, Massachusetts-based cloud storage-as-a-service company.

Box shares close at $23.23 on its IPO day, up 66 percent

Box’s first appearance on Wall Street as a public company went off to a good start. The Los Altos company’s shares are priced at $21.79 as of 7:18 AM PST, which is up from yesterday’s set price of $14 a share. At closing time, Box’s shares ended up at $23.23, which is a 66 percent boost from the $14 share price. The company ended up raising $175 million on Friday through the IPO.

Box’s IPO is being closely watched by industry observers since the cloud storage and workplace collaboration startup first detailed its IPO plans back in March. With Box’s current share price hovering in the $20 range, it’s now valued over $2 billion, which puts it back in line with the $2.4 billion valuation the company received when it took in a $150 million funding round from TPG Capital and Coatue Management.

I’ll be following the day’s developments here in this post:

7:30 a.m. PST – Here’s a chart that gives a rundown of Box’s first minutes since going public.
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7:48 a.m. – Here’s a statement from Box CEO Aaron Levie on the IPO that we received:

[blockquote person=”Aaron Levie” attribution=”Aaron Levie”]We’re in the midst of a profound technology shift, as businesses of all sizes move their critical information and processes to the cloud. It’s an incredible time to be building an enterprise software company, and we couldn’t be more excited about Box’s future. [/blockquote]

Here’s Apple’s Tim Cook sending over good vibes to Box.

And if you were curious as to what type of socks Aaron Levie might be wearing on his big day, check them out here as he visited the ever-enthusiastic Jim Cramer:

8:02 a.m. – Box is now trading at about $22.67, off a high of $24.73 so far this morning, but there’s a long way to go.

8:16 a.m. – Well, perhaps Box did undervalue itself before going public, as Gigaom’s Stowe Boyd thought when we last spoke. Stowe and others speculated that Box originally set its share prices well below the $2.4 billion valuation it received in summer in order to underplay itself and “have some headroom.”

A Reuters report currently values the company “at nearly $3 billion.”

CNBC asked Levie about why the company set the price as it did and Levie replied “Our job is to try and get a fair valuation of our company in this process and I think that was the strategy we employed and let the market kind of figure out what the pricing is from there, and I think given the growth of the business I think you’ll see kind of what we’re up to.”

A look at the trading floor as Box opens

A photo posted by NYSE (@the_nyse) on

8:30 a.m. – Levie told CNBC that he thinks Box is misunderstood in that some people believe it is a consumer company and not an enterprise company. He then listed off some of the Box’s clients (of course starting with [company]General Electric[/company]) and reiterated that the company “helps manage corporate information, secure it, and then make it accessible in different devices, allow you to collaborate around it and that’s not really the focus of Google, which is much more consumer oriented.” Hmm, I bet [company]Google[/company] would disagree.

8:44 a.m.
Here’s what Levie told CNBC about Box’s burn rate and how it plans to make a profit:
[blockquote person=”Aaron Levie” attribution=”Aaron Levie”]We run the business far more conservatively from what is assumed because we’re going after such a large market. We care about the individual profitability on a per customer basis and right now we’re in the mode where we are going after this market in a big way with a product that’s very differentiated and I would just say to investors, certainly we would prefer investors that would understand that model, that understand the sort of replatforming of enterprise IT that is playing out.

When you think about the new, next generation IT model for a large organization it’s going to be services like Workday and Salesforce and ServiceNow and these platforms, and we’re trying to take the content management and the storage infrastructure from the on-premise environment and move that to the cloud. And the economics are pretty clear in the S-1 in terms of how we get to profitability in doing so.[/blockquote]

Check out Box’s numbers per its SEC filing and see if you agree with Levie:

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8:52 a.m.

9:27 a.m. – And speaking of Dropbox and what the Box IPO could mean for the long-time Box rival, Forrester’s vice president and principal analyst Rob Koplowitz shared his thoughts with me in an email:

[blockquote person=”Rob Koplowitz” attribution=”Rob Koplowitz”]I do see Dropbox and Box on a collision course if Dropbox continues to pursue the enterprise, and I have no reason to doubt that they will. People are saying they don’t compete, and it might look that way today, but in the long run they are just taking different paths to the same goal.
[/blockquote]

Also, Levie just responded to Tim Cook’s tweet. It’s warm and gushy. Investors should be pleased.

9:48 a.m.
Levie spoke to Fox Business and was asked about competition from companies like [company]Amazon[/company] and [company]Citrix[/company] and if “any of these companies keep you up at night?”

Levie replied that since the company was founded, they’ve always been in tough competition and said the following:
[blockquote person=”Aaron Levie” attribution=”Aaron Levie”]We’re talking about essentially, every bit of data in the entire world in enterprises needs to be managed; it needs to be stored, it needs to be secured, people need to access and share that information so there’s going to be a number of companies that want to help organizations do that and so we’ve always had competition in this process.[/blockquote]

Fox Business then asked about Box’s spending habits to which Levie replied:
[blockquote person=”Aaron Levie” attribution=”Aaron Levie”]It’s always a balance, right? We see a once in a lifetime transition from on-premise technology, on-premise computing, where every single year, tens of billions of dollars are spent on a legacy technology architecture and we see that, much of that, transitioning to the cloud. And there’s only going to be a few winners when that happens so we would like to obviously be one of those winners…

…As that technology all transitions to the cloud, we need to be able to help customers and be there as they are making that transition and that takes money and that takes investment and a salesforce and marketing and building out world-class technology and those are the investments that we’ve made.[/blockquote]

There’s those words again: sales and marketing. Box is entering new territory targeting potential customers in sectors that have historically been the realm of the big enterprise vendors companies like Microsoft, IBM and Citrix.

It’s likely that Box is going to be spending more on sales and marketing to compete against the big guys for these bountiful deals, and that’s going to require a team with the necessary skills and knowledge of each industry that Box is targeting — healthcare, legal, financial, etc.

10:00 a.m.

10:08 a.m.

10:31 a.m. — Box now trading at $23.72.

11:15 a.m. — So Box is clearly having a nice day with its shares performing much better than what some folks might have thought leading. However, not everyone is saying “BUY, BUY, BUY!”

Tom Taulli at IPO Playbook is weary of a publicly traded Box and he believes Box’s revenue growth is starting to stall, writing “During the quarter ended Oct. 31, revenues increased by 69% compared to a 98% ramp for the quarter ended Jan. 31.”

Like many others, he also sees intense competition from the big cloud providers and legacy companies and writes that “there are several examples of cloud operators that have been crushed by the competition.”

He then cites Millennial Media, Inc. as an example of a startup that got in over its head in the public marketplace where it had to battle Google and Apple in the mobile app space. He writes that “Since its IPO back in March 2012, Millennial Media has lost 94% of its value.”

Does Box face a similar fate?

And if you want to live vicariously through Levie on what it is like to become a public company, Marketplace Tech was there at the trading floor and captured some sounds. Honestly, I was hoping for a lot more yelling and chaos, like the running of the bulls.

11:38 a.m. — Future frenemies?

12:41 p.m. — Share price is at $23.48.

12:57 p.m.

1:35 p.m. — Final pricing:
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This post will be updated throughout the day

Report: Box sets the price of IPO at $14 per share

Box plans to offer 12,500,000 shares priced at $14.00 per share during its IPO on Friday, according to a Reuters report late Thursday citing an underwriter. CNBC and the Wall Street Journal are also reporting that updated share price. Box will be trading on the New York Stock Exchange under the symbol BOX.

The pricing is higher than the $11 to $13 price per share the company was planning on last week. With the new pricing, the company is valued at around $1.67 billion.

Box, founded in 2005 by CEO Aaron Levie and Dylan Smith, first filed to go public in March but then wavered with its plans as the year went on, citing market problems. It wasn’t until this month that the company formally made public that it planned to go forth with its IPO plans.

In the filings, Box said it has over 32 million registered users and 44,000 paying organizations.

For the nine-month period ending October 31, 2014 Box landed $153.8 million in revenue while taking in a net loss of $121.5 million. It also had operating expenses of $242 million in operating expenses during that same time and has an accumulated deficit of $482.7 million.

Here’s a look at some of Box’s financials per the SEC filing:

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Update: Box confirmed the price in an announcement.