"the evolution of a marketplace goes from competing on the basis of technology, to competing on service, to competing as a utility, to competing for free. In each step of the evolution, competitors shake out over time and a dominant brand emerges.
To use this as a maturity model, take a market and figure out whether the primary competition is on the basis of technology, service, utility or search"
Monday, November 01, 2010
Are we ready for spotcloud yet?
Launched today by Enomaly (@ruv) Spotcloud is a "Cloud Capacity Clearinghouse and Marketplace". There was a lot of discussion on twitter about whether this is really new, and previous attempts to do something similar.
My background in this is that I was working at Sun in 2003/2004 when we were thinking about a marketplace for public grid computing capacity, I was chief architect for Shahin Khan's High Performance Technical Computing group at the time, and we "owned" Grid for Sun. We were both RIFd in the summer of 2004, but some of our projects stayed alive, and @ruv mentioned some of these ideas from Sun surfacing in 2005.
I moved to eBay, and one idea that I tried to get eBay interested in at the time was building a marketplace for compute capacity. The problem was that eBay is a retail product focused company, and had no product managers looking at digitally delivered products. I couldn't find a marketplace manager who understood what I was proposing and thought it might be worth working on. In practice, it was too early, but Amazon had the vision to build a cloud at this time, and eBay could have done the same if it wanted to create a market, rather than make existing markets more efficient.
In 2006 (while I was working at eBay Research Labs) I wrote a blog post about a maturity model for innovation. The key point is:
Today the cloud marketplace is somewhere between the service and utility phases. Each individual cloud has their own specific services and service interfaces, and they have not turned into a standard commodity yet, so we do not have the basis for competition purely on the basis of a Utility (i.e. on service quality - uptime, not on service features).
From this point of view, it is still too early for Spotcloud to take off. Cloud's problem is not "finding generic capacity at low cost" (the cloud utility search problem), the cloud marketplace is still evolving it's differentiated service interfaces towards a common set of functionality and standards. Spotcloud is starting out based on Enomaly's interfaces, and say they will add others, while the market leader is Amazon, who have already implemented their own spot pricing model.
One thing I did learn at eBay, is how hard it is to manage marketplaces. One unfortunate measure of success is that it attracts people whose aim is to make money by manipulating the market rather than contributing to it. There are a lot of non-intuitive details that you have to get right for a marketplace to scale and be robust enough to build and maintain trust, while also having very low "friction" so that it attracts and retains buyers and sellers.
So one way to tell that the marketplace for cloud capacity is viable is when you see eBay entering that marketplace :-)