Article

Intel sinks $30 million into cloud computing

Carl Brooks, Senior Technology Writer
Intel Capital, the investment arm of Intel, is forking out more than $30 million dollars in funding to advanced cloud and automation companies. Industry watchers say it's a clear sign that the tides have finally turned in the much hyped, cloud computing marketplace.

The bulk of the funding is going to opposite ends of the market: $14 million in funding to grid/private cloud software maker Adaptive Computing and $15 million to public cloud provider Joyent. The rest is split between Ciranova which makes next-generation circuit design software and Nexant Inc which makes 'intelligent grid' software for running electrical distribution networks. All present similar themes of highly automated, predictive delivery of services.

Despite the revolutionary nature of cloud computing, it has not had a huge impact on IT spending overall, with services like Amazon Web Services (AWS) and Rackspace Cloud receiving far more praise than actual cash, and data center software makers rebranding themselves private cloud without actually delivering. But now, roughly four years after AWS first opened its doors, the idea is finally catching on, according to Drue Reeves, infrastructure analyst for the Burton Group.

"It's happening all over," he said. All the major high-tech companies have made significant investments in cloud computing, either with cash, like Intel or through acquisitions, according to Reeves. They have all watched their base of enterprise customers finally begin to demand the

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agility and potential savings of cloud computing, he said.

Intel's careful apportioning of money to both a provider and a technology firm showed its faith in a hybrid market, where enterprises will run private cloud environments and consume external services in addition, said Reeves. But long term the trend was clear to the big IT firms. "Every company knows this to be true: their customers are all shifting to external [IT services]," he said.

Most research indicates Intel's faith is not misplaced. Research firm Evans Data Corporation polled developers in January 2010 and found a strong majority, 61% were using cloud computing services. IDC says that every sector of IT hardware or software will be available to be consumed as cloud in the near future, and found one half to two thirds of enterprise CIOs it surveyed were pursuing cloud technologies in various categories.

"Overall, this has been the year enterprise did their planning and got actual budget [for cloud technologies]," said Vanessa Alvarez, infrastructure analyst for Frost and Sullivan. Alvarez said that she had watched the hype around cloud computing in 2009 with amusement, and noted that enterprises seemed to have become really interested in private clouds at the beginning of the year. Now, she said, IT budgets are finally letting money loose, and a lot of it is going to technologies that help enterprises make a long-term shift to the cloud model within their walls.

"Private cloud is much more strategic," said Alvarez. Public cloud services had proved themselves out for startups, web companies and so on, but internal IT was on a long road towards consuming everything as a service, and eventually will use public cloud services for their IT. By then, she said, we may not even be calling it cloud computing anymore. "But that's clearly, seven to 10 years out," she said.

Adaptive Computing plans to spend it's windfall on hiring 30 to 40 staff through early next year, and increasing sales. Joyent said it has two goals for the money: increasing its Platform-as-a-service capabilities with next-gen JavaScript engine, node.js, and increasing its own footprint to meet demand. Adrian Ludwig, VP of marketing for Joyent, said it was buying premium datacenter space at the Las Vegas SuperNAP as well as investing in PaaS.

"The space we have is not sufficient for us to keep up." he said.


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