siggraph06
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The business of cloud and utility computing. Breaking the technology link by tieing pricing to end user valueTRANSCRIPT
Grid Utility Technology DriversEnabling New Business Models
July 30, 2006Paul KampGridInstitute [email protected]
Sun Proprietary/Confidential: Internal Use OnlyPage 2 MediaGrid Summit July 30, 2006
Technology Context – The Net Effect
10,000X
1,000X
100X
10X
1X
1,000,000X
100,000X
1980 1990 2000
Moore’sLaw
Gilder’sLaw
Metcalfe’sLaw
Net Effect
For a given cost, performance improves over timePerformance
Time
Sun Proprietary/Confidential: Internal Use OnlyPage 3 MediaGrid Summit July 30, 2006
Business Context – The Net Effect
10,000X
1,000X
100X
10X
1X
1,000,000X
100,000X
1980 1990 2000
For a given performance levelthe cost to deliver a solution decreases over time
Performance
Time
Cost $/Unit of Performance
1/100$
1/1,000$
1/10,000$
1/100,000$
1/1,000,000$
1$
1/10$Cost to Deliver a 'Solution'
Sun Proprietary/Confidential: Internal Use OnlyPage 4 MediaGrid Summit July 30, 2006
Example solution – iTunes Music Store (iTMS)Bricks and Mortar distribution - Vinyl 45 RPM record
Artist Record Label Point of SalePromotion
Local Record Store
Inventory
Distribution
Content Creation
Manufacturing
Performing Artist
Songwriter
Sun Proprietary/Confidential: Internal Use OnlyPage 5 MediaGrid Summit July 30, 2006
Example solution – iTunes Music Store (iTMS)Bits and bandwidth distribution – iTunes Music Store
Artist Record Label Point of SalePromotion Online Music Store
InventoryDistribution
Content Creation
Manufacturing
Performing Artist
Songwriter
Sun Proprietary/Confidential: Internal Use OnlyPage 6 MediaGrid Summit July 30, 2006
Business Model – Increasing GM's Over TimeCost to deliver service decreases faster than price
$10,000
$1,000
$100
$10
$1
$1,000,000
$100,000
1980 1990 2000
Price
Time
Cost $/Unit of Performance
1/100$
1/1,000$
1/10,000$
1/100,000$
1/1,000,000$
1$
1/10$GROSS MARGINS
Cost to Deliver the Service
Price for Service that Technology is Delivering
Sun Proprietary/Confidential: Internal Use OnlyPage 7 MediaGrid Summit July 30, 2006
Utility and Application Delivery ChainEnabling the digital economy
Utility Computing Grid Distribution Applications
Utility Metering
Online Record Store
Direct Marketing
Delivery mechanism
Engine – Computer Center
Monitoring
Provisioning
Application Metering
Sun Proprietary/Confidential: Internal Use OnlyPage 8 MediaGrid Summit July 30, 2006
The Transition from Atoms to Bits
“The change from atoms to bits is irrevocable and unstoppable. Why now? Because the change is also exponential - small differences of yesterday can have
suddenly shocking consequences tomorrow.”
Nicholas NegroponteBeing Digital
Sun Proprietary/Confidential: Internal Use OnlyPage 9 MediaGrid Summit July 30, 2006
A Few Additional Examples● Tivo
– Service wrapped technology● Constant Contact
– Direct Mail marketing● Shutterfly, Kodak
– Digital film development and prints● Starbucks
– Internet Access as a utility . . .– Reseller of T-Mobile bandwidth
Sun Proprietary/Confidential: Internal Use OnlyPage 10 MediaGrid Summit July 30, 2006
A Few Proposed Media Examples● Digital Distribution of Film
– In 2003 the film industry spent $631M onphysical reels of film for US distribution
● Internet based distribution of radio– Save on Satellite time
● Digital Rendering of Film– Why buy the hardware when you can rent it
● Virtual Medicine– Telepresence– Medical Imaging
Sun Proprietary/Confidential: Internal Use OnlyPage 11 MediaGrid Summit July 30, 2006
Summary Recommendation – Next steps
● Rethink your business model to take advantage of the new modes of distribution and product development
– Define Partners, customers, delivery mechanism, that change the industry dynamics
– Application pricing must be in customer and solution terms
● Particpate in industry forums to enable the new business model
– Join the Quality of Service Technology Group (QOSTG)● Identifier: grid.qos● Web site: http://mediagrid.org/groups/technology/grid.qos● Email list: [email protected]
– Join the Grid Gateway Technology Group (GGTG)● Identifier: grid.gateway● Web site: http://mediagrid.org/groups/technology/grid.gateway● Email list: [email protected]