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Thursday, June 24, 2004
Checking out the last two postings... Master Card and MSFT focus on Small and Medium sized Business... u know where the next trend is.. after the downturn in economy because of drop in corporate funding....
Jacksonville.com: Business: Microsoft strugging to fortify its small business unit 06/17/04
Last modified Thu., June 17, 2004 - 12:23 AM
Originally created Thursday, June 17, 2004
Microsoft strugging to fortify its small business unit
By ALLISON LINN
Associated Press
SEATTLE -- News that Microsoft Corp. discussed a merger with business software giant SAP AG has focused new attention on Microsoft's limited success in a market it would love to conquer.
Microsoft is rejiggering plans to cater to the more specialized needs of small businesses, part of a wider effort to find new revenue streams to augment its traditional cash cows. The hope is to score with accounting and other software that Microsoft is not traditionally known for. The target customer: companies with fewer than 1,000 employees.
The most recent changes -- including putting the Microsoft Business Solutions unit under the direct control of chief executive Steve Ballmer -- come as the company concedes it has not been able to beat the competition as it hoped.
Microsoft made its first big push in the market several years ago, with the $1.1 billion acquisition of Great Plains Software Inc., a longtime player in a fragmented sector lacking a dominant leader. Microsoft believes the market includes as many as 40 million companies worldwide.
Now the segment is more important because Microsoft's big moneymakers -- the Windows operating system and Office software -- have grown so dominant that their respective markets are getting saturated. Microsoft's stock price has remained relatively flat in recent years.
Chris Alliegro, lead analyst with independent research firm Directions on Microsoft, believes Microsoft sees small- and mid-sized business software as the ''potential next big revenue wave.''
But despite Microsoft's potential power -- including around $60 billion in cash to fund acquisitions or product research -- selling to small and mid-sized companies hasn't come easily.
The Business Solutions division, MBS, had the weakest results of Microsoft's seven units in the most recent quarter, meeting expectations but continuing to lose money -- $65 million on revenue of $153 million.
The unit was created out of acqusitions of Great Plains and Denmark's Navision, combined with some of Microsoft's own small-business software. That's left it with a wide array of products catering to specialized needs, such as accounting and customer relationship management, for niche businesses like mom-and-pop manufacturers or small firms needing broad multinational support.
As the company has tried to fold in its acquisitions and train its sales force, some analysts say the unit has lacked strong direction.
''At the end of the day, I think they need a better strategy,'' said Rob Enderle, principal analyst with the Enderle Group.
One such strategy could be to try to grab more overall business from other big companies that sell business-related software, facing off with the likes of Oracle Corp. and Germany's SAP.
In defending its hostile takeover bid for rival PeopleSoft Inc. in a federal antitrust case in San Francisco, Oracle is arguing that it faces an impending threat from Microsoft.
Mindful that Oracle's lawyers would be mentioning its merger talks with SAP, Microsoft disclosed recently that it had made an overture to SAP. The talks didn't get far, the company said, as Microsoft decided such a marriage would be too difficult.
Orlando Ayala, a Microsoft sales star recently named chief operating officer of MBS, insists that businesses with 1,000 employees or less are a ''sweet spot'' rife with untapped potential.
Still, he says he's concerned that companies like Oracle will try to muscle into that turf, joining current competitors such as Intuit Inc. and Salesforce.com. Also lurking is IBM Corp., which makes most of its money selling hardware, software and technology services to big organizations but has made a goal of getting more action from small and medium businesses.
Ayala says MBS's growth has been stymied by the distractions of reorganizing the division. He says recent moves, which included some layoffs, are ''not a retrenchment'' but rather a sign that ''we are putting the pedal to the metal.''
But the company has scaled back its expectations.
At one time, Microsoft had said it expected the unit to have annual revenue of $10 billion, perhaps as early as 2010. Ayala now says the unit has the potential to reach that goal but it would be hard to say when.
He does expect the unit to reach $1 billion in annual revenue in the next two years -- and become profitable ''in a very, very reasonable time frame.''
Last modified Thu., June 17, 2004 - 12:23 AM
Originally created Thursday, June 17, 2004
Microsoft strugging to fortify its small business unit
By ALLISON LINN
Associated Press
SEATTLE -- News that Microsoft Corp. discussed a merger with business software giant SAP AG has focused new attention on Microsoft's limited success in a market it would love to conquer.
Microsoft is rejiggering plans to cater to the more specialized needs of small businesses, part of a wider effort to find new revenue streams to augment its traditional cash cows. The hope is to score with accounting and other software that Microsoft is not traditionally known for. The target customer: companies with fewer than 1,000 employees.
The most recent changes -- including putting the Microsoft Business Solutions unit under the direct control of chief executive Steve Ballmer -- come as the company concedes it has not been able to beat the competition as it hoped.
Microsoft made its first big push in the market several years ago, with the $1.1 billion acquisition of Great Plains Software Inc., a longtime player in a fragmented sector lacking a dominant leader. Microsoft believes the market includes as many as 40 million companies worldwide.
Now the segment is more important because Microsoft's big moneymakers -- the Windows operating system and Office software -- have grown so dominant that their respective markets are getting saturated. Microsoft's stock price has remained relatively flat in recent years.
Chris Alliegro, lead analyst with independent research firm Directions on Microsoft, believes Microsoft sees small- and mid-sized business software as the ''potential next big revenue wave.''
But despite Microsoft's potential power -- including around $60 billion in cash to fund acquisitions or product research -- selling to small and mid-sized companies hasn't come easily.
The Business Solutions division, MBS, had the weakest results of Microsoft's seven units in the most recent quarter, meeting expectations but continuing to lose money -- $65 million on revenue of $153 million.
The unit was created out of acqusitions of Great Plains and Denmark's Navision, combined with some of Microsoft's own small-business software. That's left it with a wide array of products catering to specialized needs, such as accounting and customer relationship management, for niche businesses like mom-and-pop manufacturers or small firms needing broad multinational support.
As the company has tried to fold in its acquisitions and train its sales force, some analysts say the unit has lacked strong direction.
''At the end of the day, I think they need a better strategy,'' said Rob Enderle, principal analyst with the Enderle Group.
One such strategy could be to try to grab more overall business from other big companies that sell business-related software, facing off with the likes of Oracle Corp. and Germany's SAP.
In defending its hostile takeover bid for rival PeopleSoft Inc. in a federal antitrust case in San Francisco, Oracle is arguing that it faces an impending threat from Microsoft.
Mindful that Oracle's lawyers would be mentioning its merger talks with SAP, Microsoft disclosed recently that it had made an overture to SAP. The talks didn't get far, the company said, as Microsoft decided such a marriage would be too difficult.
Orlando Ayala, a Microsoft sales star recently named chief operating officer of MBS, insists that businesses with 1,000 employees or less are a ''sweet spot'' rife with untapped potential.
Still, he says he's concerned that companies like Oracle will try to muscle into that turf, joining current competitors such as Intuit Inc. and Salesforce.com. Also lurking is IBM Corp., which makes most of its money selling hardware, software and technology services to big organizations but has made a goal of getting more action from small and medium businesses.
Ayala says MBS's growth has been stymied by the distractions of reorganizing the division. He says recent moves, which included some layoffs, are ''not a retrenchment'' but rather a sign that ''we are putting the pedal to the metal.''
But the company has scaled back its expectations.
At one time, Microsoft had said it expected the unit to have annual revenue of $10 billion, perhaps as early as 2010. Ayala now says the unit has the potential to reach that goal but it would be hard to say when.
He does expect the unit to reach $1 billion in annual revenue in the next two years -- and become profitable ''in a very, very reasonable time frame.''
MasterCard Launches `Priceless' Advertising Campaign Targeting Small Business Market; Television and Print Ads Highlight the Unique Qualities Of Today's Small Business Owner: "MasterCard Launches `Priceless' Advertising Campaign Targeting Small Business Market; Television and Print Ads Highlight the Unique Qualities Of Today's Small Business Owner
E-mail or Print this story
17 June 2004, 08:43am ET
PURCHASE, N.Y.--(BUSINESS WIRE)--June 17, 2004--MasterCard International today unveiled a new Priceless television spot, which targets the small business market. The campaign -- built around the theme of 'What It Takes' to run a small business -- focuses on communicating MasterCard's ability to help small business owners succeed. The ad will first appear on NBC's June 17, 2004, coverage of the U.S. Open golf tournament. It will later run on networks such as CBS, Fox and CNN. The 30-second commercial is part of MasterCard's award-winning Priceless campaign.
The 'What It Takes' television spot focuses on how it takes a person with truly special and unique qualities -- from patience and dedication to a sense of humor -- to handle the day-to-day challenges of running a small business. Recognizing small business owners are stretched for time and lack the resources of large corporations"
PURCHASE, N.Y.--(BUSINESS WIRE)--June 17, 2004--MasterCard International today unveiled a new Priceless television spot, which targets the small business market. The campaign -- built around the theme of "What It Takes" to run a small business -- focuses on communicating MasterCard's ability to help small business owners succeed. The ad will first appear on NBC's June 17, 2004, coverage of the U.S. Open golf tournament. It will later run on networks such as CBS, Fox and CNN. The 30-second commercial is part of MasterCard's award-winning Priceless campaign.
The "What It Takes" television spot focuses on how it takes a person with truly special and unique qualities -- from patience and dedication to a sense of humor -- to handle the day-to-day challenges of running a small business. Recognizing small business owners are stretched for time and lack the resources of large corporations, the MasterCard ad captures real-life small business moments such as working odd hours and dealing with faulty office equipment. MasterCard's "What It Takes" commercial salutes people in business for themselves, while also demonstrating why MasterCard business cards are the most effective way to pay for all the things a small business needs.
A corresponding print ad is slated to break later this summer in publications such as Fortune, New York Times Magazine, TIME and The Wall Street Journal. The creative used in the print versions will follow the "What It Takes" theme leveraged in the new television commercial.
Both the television and print ads are designed to build awareness of MasterCard's suite of solutions created specifically for small business owners. To address the needs of this target market, MasterCard developed MasterCard Working for Small Business, a comprehensive global program that provides small businesses with payment cards, online tools and other resources that deliver financial control, data management, analysis and reporting, along with rewards and benefits.
"This latest Priceless execution is a great example of how we leverage creative to communicate MasterCard's value proposition to important target markets, such as small business owners," said Amy Fuller, vice president of Brand Building for MasterCard International. "By illustrating the types of obstacles small business owners encounter, we're able to clearly demonstrate that MasterCard understands the challenges facing today's small business owner."
Creative for the "What It Takes" campaign was developed by McCann-Erickson of New York: Creative Director, Joyce King-Thomas; Copywriter, Larry Platt; Art Director, David Fox; and Producer, Julie Andariese.
About MasterCard Working for Small Business
MasterCard Working for Small Business is a comprehensive global program that provides small businesses with payment cards, online tools and other resources that deliver financial control, data management, analysis and reporting, along with rewards and benefits. More information on MasterCard Working for Small Business is available at www.mastercardworking.com .
About MasterCard International
MasterCard International is a leading global payments solutions company that provides a broad variety of innovative services in support of our global members' credit, deposit access, electronic cash, business-to-business and related payment programs. MasterCard International manages a family of well-known, widely accepted payment card brands including MasterCard(R), Maestro(R) and Cirrus(R) and serves financial institutions, consumers and businesses in over 210 countries and territories. The MasterCard award-winning Priceless(R) advertising campaign is now seen in 96 countries and in 47 languages, giving the MasterCard brand a truly global reach and scope. For more information go to www.mastercardinternational.com .
CONTACT: MasterCard International
Chris Monteiro, 914-249-5826
chris_monteiro@mastercard.com
or
Waggener Edstrom
Dave Howell, 617-663-4909
dhowell@wagged.com
SOURCE: MasterCard International
E-mail or Print this story
17 June 2004, 08:43am ET
PURCHASE, N.Y.--(BUSINESS WIRE)--June 17, 2004--MasterCard International today unveiled a new Priceless television spot, which targets the small business market. The campaign -- built around the theme of 'What It Takes' to run a small business -- focuses on communicating MasterCard's ability to help small business owners succeed. The ad will first appear on NBC's June 17, 2004, coverage of the U.S. Open golf tournament. It will later run on networks such as CBS, Fox and CNN. The 30-second commercial is part of MasterCard's award-winning Priceless campaign.
The 'What It Takes' television spot focuses on how it takes a person with truly special and unique qualities -- from patience and dedication to a sense of humor -- to handle the day-to-day challenges of running a small business. Recognizing small business owners are stretched for time and lack the resources of large corporations"
PURCHASE, N.Y.--(BUSINESS WIRE)--June 17, 2004--MasterCard International today unveiled a new Priceless television spot, which targets the small business market. The campaign -- built around the theme of "What It Takes" to run a small business -- focuses on communicating MasterCard's ability to help small business owners succeed. The ad will first appear on NBC's June 17, 2004, coverage of the U.S. Open golf tournament. It will later run on networks such as CBS, Fox and CNN. The 30-second commercial is part of MasterCard's award-winning Priceless campaign.
The "What It Takes" television spot focuses on how it takes a person with truly special and unique qualities -- from patience and dedication to a sense of humor -- to handle the day-to-day challenges of running a small business. Recognizing small business owners are stretched for time and lack the resources of large corporations, the MasterCard ad captures real-life small business moments such as working odd hours and dealing with faulty office equipment. MasterCard's "What It Takes" commercial salutes people in business for themselves, while also demonstrating why MasterCard business cards are the most effective way to pay for all the things a small business needs.
A corresponding print ad is slated to break later this summer in publications such as Fortune, New York Times Magazine, TIME and The Wall Street Journal. The creative used in the print versions will follow the "What It Takes" theme leveraged in the new television commercial.
Both the television and print ads are designed to build awareness of MasterCard's suite of solutions created specifically for small business owners. To address the needs of this target market, MasterCard developed MasterCard Working for Small Business, a comprehensive global program that provides small businesses with payment cards, online tools and other resources that deliver financial control, data management, analysis and reporting, along with rewards and benefits.
"This latest Priceless execution is a great example of how we leverage creative to communicate MasterCard's value proposition to important target markets, such as small business owners," said Amy Fuller, vice president of Brand Building for MasterCard International. "By illustrating the types of obstacles small business owners encounter, we're able to clearly demonstrate that MasterCard understands the challenges facing today's small business owner."
Creative for the "What It Takes" campaign was developed by McCann-Erickson of New York: Creative Director, Joyce King-Thomas; Copywriter, Larry Platt; Art Director, David Fox; and Producer, Julie Andariese.
About MasterCard Working for Small Business
MasterCard Working for Small Business is a comprehensive global program that provides small businesses with payment cards, online tools and other resources that deliver financial control, data management, analysis and reporting, along with rewards and benefits. More information on MasterCard Working for Small Business is available at www.mastercardworking.com .
About MasterCard International
MasterCard International is a leading global payments solutions company that provides a broad variety of innovative services in support of our global members' credit, deposit access, electronic cash, business-to-business and related payment programs. MasterCard International manages a family of well-known, widely accepted payment card brands including MasterCard(R), Maestro(R) and Cirrus(R) and serves financial institutions, consumers and businesses in over 210 countries and territories. The MasterCard award-winning Priceless(R) advertising campaign is now seen in 96 countries and in 47 languages, giving the MasterCard brand a truly global reach and scope. For more information go to www.mastercardinternational.com .
CONTACT: MasterCard International
Chris Monteiro, 914-249-5826
chris_monteiro@mastercard.com
or
Waggener Edstrom
Dave Howell, 617-663-4909
dhowell@wagged.com
SOURCE: MasterCard International
destinationCRM.com: Business Process Management Is the Next Phase in the CRM Evolution
Business Process Management Is the Next Phase in the CRM Evolution
Used to complement each other the two will drive greater results than they would on their own.
by Robert Thaler
Monday, June 21, 2004
--------------------------------------------------------------------------------
Explorers who land on uncharted shores or Marines who hit the beach first are heroes. However, in the customer service realm the technology that established the first beachhead between customer and IT systems is treated like a goat. Since adoption of CRM began in earnest about five years ago, many CRM applications have been widely, and unfairly, derided as failures. Business process management (BPM) technology is often posited as the savior that's going to supplant CRM and deliver on its broken promises.
Besides being untrue the perception sets BPM up for the same fall that CRM took. The reality is that the two technologies are complementary--they just represent successive steps in customer-facing technology's evolution.
CRM established the missing and vital link between frontline customer service and IT systems. When CRM emerged, customer service representatives no longer had to navigate separate customer, financial, shipping systems, etc., to complete a customer transaction. CRM unified relevant systems under a single, easy-to-use interface. The Achilles heel, however, was that these systems lacked sufficient access to corporate data sources, which were themselves poorly integrated and unable to provide a coherent, unified customer view. That's where BPM cames in.
BPM encompasses and extends CRM, providing a link to enterprise data sources, processes, and practices. BPM applications unify corporate data sources and give managers control over customer service-related practices and procedures, usually through their CRM application interface. Automating the core practices and process of the business--the touchstone of true BPM technology--enables business analysts to quickly change procedures to respond to shifting customer demand and market conditions, often without adding any workload to the IT department. This powerful combination of workflow and rules engine technologies will realize CRM's promise, and solidify its position as a vital step in the evolution of customer service technology.
Taking care of business, front and back
Process is how people and systems interact to do work. Practice is the corporate policies and guidelines that define and drive decisions. True BPM systems offer practice and process control in a single, integrated package. BPM's role is to provide a flexible data integration framework that supports all enterprise applications and is the primary vehicle for controlling customer-related practices and processes.
BPM extends CRM by picking up where CRM has traditionally left off, which is usually at the entrance to the back room. Until now CRM had little if any "pre-call" research capability based on real-time data retrieval--that is, CSRs would take incoming calls with little or no advance information on the customer. CSRs have to ask the customer repetitive questions and populate on-screen forms manually, often when the company has the data in other systems. A BPM system can support an existing CRM system as, for example, a button on the interface that CSRs use to populate a new screen.
For example, if a customer calls an insurance company and wants a rate for a new car, the company needs to know the customer's address, age, driving record, etc. An insurance company has business rules for quoting a rate, so the BPM system should support the process by automatically collecting the data a CSR needs to complete the transaction. That way the CSR doesn't have to ask the customer for information the company already knows, or keep them holding while they leave their CRM application to search other systems.
Marriage of equals
CRM is a pioneering technology, not a failure. BPM, with its ability to automate practice and process rules and report activity with graphical monitoring, is the next generation of customer-centric technology. There is no subordinate role in this relationship: The technologies need each other to succeed in the customer service arena.
BPM is built to take advantage of the investment companies have already made in CRM. Rules-based BPM solutions that manage practice and process surround and extend CRM, preserving its value and expanding its functionality. BPM gives business analysts the ability to change customer-facing rules and processes immediately, to avoid problems and risks, at the enterprise and department levels without going through IT. Together, BPM and CRM will help forward-looking companies increase profitability through greater customer loyalty.
About the Author
Robert Thaler is director of product marketing, PegaRULES, for Pegasystems. Contact him at Robert.thaler@pega.com
Business Process Management Is the Next Phase in the CRM Evolution
Used to complement each other the two will drive greater results than they would on their own.
by Robert Thaler
Monday, June 21, 2004
--------------------------------------------------------------------------------
Explorers who land on uncharted shores or Marines who hit the beach first are heroes. However, in the customer service realm the technology that established the first beachhead between customer and IT systems is treated like a goat. Since adoption of CRM began in earnest about five years ago, many CRM applications have been widely, and unfairly, derided as failures. Business process management (BPM) technology is often posited as the savior that's going to supplant CRM and deliver on its broken promises.
Besides being untrue the perception sets BPM up for the same fall that CRM took. The reality is that the two technologies are complementary--they just represent successive steps in customer-facing technology's evolution.
CRM established the missing and vital link between frontline customer service and IT systems. When CRM emerged, customer service representatives no longer had to navigate separate customer, financial, shipping systems, etc., to complete a customer transaction. CRM unified relevant systems under a single, easy-to-use interface. The Achilles heel, however, was that these systems lacked sufficient access to corporate data sources, which were themselves poorly integrated and unable to provide a coherent, unified customer view. That's where BPM cames in.
BPM encompasses and extends CRM, providing a link to enterprise data sources, processes, and practices. BPM applications unify corporate data sources and give managers control over customer service-related practices and procedures, usually through their CRM application interface. Automating the core practices and process of the business--the touchstone of true BPM technology--enables business analysts to quickly change procedures to respond to shifting customer demand and market conditions, often without adding any workload to the IT department. This powerful combination of workflow and rules engine technologies will realize CRM's promise, and solidify its position as a vital step in the evolution of customer service technology.
Taking care of business, front and back
Process is how people and systems interact to do work. Practice is the corporate policies and guidelines that define and drive decisions. True BPM systems offer practice and process control in a single, integrated package. BPM's role is to provide a flexible data integration framework that supports all enterprise applications and is the primary vehicle for controlling customer-related practices and processes.
BPM extends CRM by picking up where CRM has traditionally left off, which is usually at the entrance to the back room. Until now CRM had little if any "pre-call" research capability based on real-time data retrieval--that is, CSRs would take incoming calls with little or no advance information on the customer. CSRs have to ask the customer repetitive questions and populate on-screen forms manually, often when the company has the data in other systems. A BPM system can support an existing CRM system as, for example, a button on the interface that CSRs use to populate a new screen.
For example, if a customer calls an insurance company and wants a rate for a new car, the company needs to know the customer's address, age, driving record, etc. An insurance company has business rules for quoting a rate, so the BPM system should support the process by automatically collecting the data a CSR needs to complete the transaction. That way the CSR doesn't have to ask the customer for information the company already knows, or keep them holding while they leave their CRM application to search other systems.
Marriage of equals
CRM is a pioneering technology, not a failure. BPM, with its ability to automate practice and process rules and report activity with graphical monitoring, is the next generation of customer-centric technology. There is no subordinate role in this relationship: The technologies need each other to succeed in the customer service arena.
BPM is built to take advantage of the investment companies have already made in CRM. Rules-based BPM solutions that manage practice and process surround and extend CRM, preserving its value and expanding its functionality. BPM gives business analysts the ability to change customer-facing rules and processes immediately, to avoid problems and risks, at the enterprise and department levels without going through IT. Together, BPM and CRM will help forward-looking companies increase profitability through greater customer loyalty.
About the Author
Robert Thaler is director of product marketing, PegaRULES, for Pegasystems. Contact him at Robert.thaler@pega.com
Wednesday, June 23, 2004
http://blog.topix.net/archives/000016.html
The Secret Source of Google's Power
Much is being written about Gmail, Google's new free webmail system. There's something deeper to learn about Google from this product than the initial reaction to the product features, however. Ignore for a moment the observations about Google leapfrogging their competitors with more user value and a new feature or two. Or Google diversifying away from search into other applications; they've been doing that for a while. Or the privacy red herring.
No, the story is about seemingly incremental features that are actually massively expensive for others to match, and the platform that Google is building which makes it cheaper and easier for them to develop and run web-scale applications than anyone else.
I've written before about Google's snippet service, which required that they store the entire web in RAM. All so they could generate a slightly better page excerpt than other search engines.
Google has taken the last 10 years of systems software research out of university labs, and built their own proprietary, production quality system. What is this platform that Google is building? It's a distributed computing platform that can manage web-scale datasets on 100,000 node server clusters. It includes a petabyte, distributed, fault tolerant filesystem, distributed RPC code, probably network shared memory and process migration. And a datacenter management system which lets a handful of ops engineers effectively run 100,000 servers. Any of these projects could be the sole focus of a startup.
Speculation: Gmail's Architecture and Economics
Let's make some guesses about how one might build a Gmail.
Hotmail has 60 million users. Gmail's design should be comparable, and should scale to 100 million users. It will only have to support a couple of million in the first year though.
The most obvious challenge is the storage. You can't lose people's email, and you don't want to ever be down, so data has to be replicated. RAID is no good; when a disk fails, a human needs to replace the bad disk, or there is risk of data loss if more disks fail. One imagines the old ENIAC technician running up and down the isles of Google's data center with a shopping cart full of spare disk drives instead of vacuum tubes. RAID also requires more expensive hardware -- at least the hot swap drive trays. And RAID doesn't handle high availability at the server level anyway.
No. Google has 100,000 servers. [nytimes] If a server/disk dies, they leave it dead in the rack, to be reclaimed/replaced later. Hardware failures need to be instantly routed around by software.
Google has built their own distributed, fault-tolerant, petabyte filesystem, the Google Filesystem. This is ideal for the job. Say GFS replicates user email in three places; if a disk or a server dies, GFS can automatically make a new copy from one of the remaining two. Compress the email for a 3:1 storage win, then store user's email in three locations, and their raw storage need is approximately equivalent to the user's mail size.
The Gmail servers wouldn't be top-heavy with lots of disk. They need the CPU for indexing and page view serving anyway. No fancy RAID card or hot-swap trays, just 1-2 disks per 1U server.
It's straightforward to spreadsheet out the economics of the service, taking into account average storage per user, cost of the servers, and monetization per user per year. Google apparently puts the operational cost of storage at $2 per gigabyte. My napkin math comes up with numbers in the same ballpark. I would assume the yearly monetized value of a webmail user to be in the $1-10 range.
Cheap Hardware
Here's an anecdote to illustrate how far Google's cultural approach to hardware cost is different from the norm, and what it means as a component of their competitive advantage.
In a previous job I specified 40 moderately-priced servers to run a new internet search site we were developing. The ops team overrode me; they wanted 6 more expensive servers, since they said it would be easier to manage 6 machines than 40.
What this does is raise the cost of a CPU second. We had engineers that could imagine algorithms that would give marginally better search results, but if the algorithm was 10 times slower than the current code, ops would have to add 10X the number of machines to the datacenter. If you've already got $20 million invested in a modest collection of Suns, going 10X to run some fancier code is not an option.
Google has 100,000 servers.
Any sane ops person would rather go with a fancy $5000 server than a bare $500 motherboard plus disks sitting exposed on a tray. But that's a 10X difference to the cost of a CPU cycle. And this frees up the algorithm designers to invent better stuff.
Without cheap CPU cycles, the coders won't even consider algorithms that the Google guys are deploying. They're just too expensive to run.
Google doesn't deploy bare motherboards on exposed trays anymore; they're on at least the fourth iteration of their cheap hardware platform. Google now has an institutional competence building and maintaining servers that cost a lot less than the servers everyone else is using. And they do it with fewer people.
Think of the little internal factory they must have to deploy servers, and the level of automation needed to run that many boxes. Either network boot or a production line to pre-install disk images. Servers that self-configure on boot to determine their network config and load the latest rev of the software they'll be running. Normal datacenter ops practices don't scale to what Google has.
What are all those OS Researchers doing at Google?
Rob Pike has gone to Google. Yes, that Rob Pike -- the OS researcher, the member of the original Unix team from Bell Labs. This guy isn't just some labs hood ornament; he writes code, lots of it. Big chunks of whole new operating systems like Plan 9.
Look at the depth of the research background of the Google employees in OS, networking, and distributed systems. Compiler Optimization. Thread migration. Distributed shared memory.
I'm a sucker for cool OS research. Browsing papers from Google employees about distributed systems, thread migration, network shared memory, GFS, makes me feel like a kid in Tomorrowland wondering when we're going to Mars. Wouldn't it be great, as an engineer, to have production versions of all this great research.
Google engineers do!
Competitive Advantage
Google is a company that has built a single very large, custom computer. It's running their own cluster operating system. They make their big computer even bigger and faster each month, while lowering the cost of CPU cycles. It's looking more like a general purpose platform than a cluster optimized for a single application.
While competitors are targeting the individual applications Google has deployed, Google is building a massive, general purpose computing platform for web-scale programming.
This computer is running the world's top search engine, a social networking service, a shopping price comparison engine, a new email service, and a local search/yellow pages engine. What will they do next with the world's biggest computer and most advanced operating system?
The Secret Source of Google's Power
Much is being written about Gmail, Google's new free webmail system. There's something deeper to learn about Google from this product than the initial reaction to the product features, however. Ignore for a moment the observations about Google leapfrogging their competitors with more user value and a new feature or two. Or Google diversifying away from search into other applications; they've been doing that for a while. Or the privacy red herring.
No, the story is about seemingly incremental features that are actually massively expensive for others to match, and the platform that Google is building which makes it cheaper and easier for them to develop and run web-scale applications than anyone else.
I've written before about Google's snippet service, which required that they store the entire web in RAM. All so they could generate a slightly better page excerpt than other search engines.
Google has taken the last 10 years of systems software research out of university labs, and built their own proprietary, production quality system. What is this platform that Google is building? It's a distributed computing platform that can manage web-scale datasets on 100,000 node server clusters. It includes a petabyte, distributed, fault tolerant filesystem, distributed RPC code, probably network shared memory and process migration. And a datacenter management system which lets a handful of ops engineers effectively run 100,000 servers. Any of these projects could be the sole focus of a startup.
Speculation: Gmail's Architecture and Economics
Let's make some guesses about how one might build a Gmail.
Hotmail has 60 million users. Gmail's design should be comparable, and should scale to 100 million users. It will only have to support a couple of million in the first year though.
The most obvious challenge is the storage. You can't lose people's email, and you don't want to ever be down, so data has to be replicated. RAID is no good; when a disk fails, a human needs to replace the bad disk, or there is risk of data loss if more disks fail. One imagines the old ENIAC technician running up and down the isles of Google's data center with a shopping cart full of spare disk drives instead of vacuum tubes. RAID also requires more expensive hardware -- at least the hot swap drive trays. And RAID doesn't handle high availability at the server level anyway.
No. Google has 100,000 servers. [nytimes] If a server/disk dies, they leave it dead in the rack, to be reclaimed/replaced later. Hardware failures need to be instantly routed around by software.
Google has built their own distributed, fault-tolerant, petabyte filesystem, the Google Filesystem. This is ideal for the job. Say GFS replicates user email in three places; if a disk or a server dies, GFS can automatically make a new copy from one of the remaining two. Compress the email for a 3:1 storage win, then store user's email in three locations, and their raw storage need is approximately equivalent to the user's mail size.
The Gmail servers wouldn't be top-heavy with lots of disk. They need the CPU for indexing and page view serving anyway. No fancy RAID card or hot-swap trays, just 1-2 disks per 1U server.
It's straightforward to spreadsheet out the economics of the service, taking into account average storage per user, cost of the servers, and monetization per user per year. Google apparently puts the operational cost of storage at $2 per gigabyte. My napkin math comes up with numbers in the same ballpark. I would assume the yearly monetized value of a webmail user to be in the $1-10 range.
Cheap Hardware
Here's an anecdote to illustrate how far Google's cultural approach to hardware cost is different from the norm, and what it means as a component of their competitive advantage.
In a previous job I specified 40 moderately-priced servers to run a new internet search site we were developing. The ops team overrode me; they wanted 6 more expensive servers, since they said it would be easier to manage 6 machines than 40.
What this does is raise the cost of a CPU second. We had engineers that could imagine algorithms that would give marginally better search results, but if the algorithm was 10 times slower than the current code, ops would have to add 10X the number of machines to the datacenter. If you've already got $20 million invested in a modest collection of Suns, going 10X to run some fancier code is not an option.
Google has 100,000 servers.
Any sane ops person would rather go with a fancy $5000 server than a bare $500 motherboard plus disks sitting exposed on a tray. But that's a 10X difference to the cost of a CPU cycle. And this frees up the algorithm designers to invent better stuff.
Without cheap CPU cycles, the coders won't even consider algorithms that the Google guys are deploying. They're just too expensive to run.
Google doesn't deploy bare motherboards on exposed trays anymore; they're on at least the fourth iteration of their cheap hardware platform. Google now has an institutional competence building and maintaining servers that cost a lot less than the servers everyone else is using. And they do it with fewer people.
Think of the little internal factory they must have to deploy servers, and the level of automation needed to run that many boxes. Either network boot or a production line to pre-install disk images. Servers that self-configure on boot to determine their network config and load the latest rev of the software they'll be running. Normal datacenter ops practices don't scale to what Google has.
What are all those OS Researchers doing at Google?
Rob Pike has gone to Google. Yes, that Rob Pike -- the OS researcher, the member of the original Unix team from Bell Labs. This guy isn't just some labs hood ornament; he writes code, lots of it. Big chunks of whole new operating systems like Plan 9.
Look at the depth of the research background of the Google employees in OS, networking, and distributed systems. Compiler Optimization. Thread migration. Distributed shared memory.
I'm a sucker for cool OS research. Browsing papers from Google employees about distributed systems, thread migration, network shared memory, GFS, makes me feel like a kid in Tomorrowland wondering when we're going to Mars. Wouldn't it be great, as an engineer, to have production versions of all this great research.
Google engineers do!
Competitive Advantage
Google is a company that has built a single very large, custom computer. It's running their own cluster operating system. They make their big computer even bigger and faster each month, while lowering the cost of CPU cycles. It's looking more like a general purpose platform than a cluster optimized for a single application.
While competitors are targeting the individual applications Google has deployed, Google is building a massive, general purpose computing platform for web-scale programming.
This computer is running the world's top search engine, a social networking service, a shopping price comparison engine, a new email service, and a local search/yellow pages engine. What will they do next with the world's biggest computer and most advanced operating system?
