Shining Light on Dark Clouds

At 3Point we are of the opinion that cloud computing is rapidly evolving to the point that eventually nearly every corner of business will be impacted. We see nearly all segments of technology, from semiconductors to enterprise software to mobility, becoming significant elements of the cloud.

However, as we have mentioned in this space before, cloud computing hype is beginning to peak which could lead to confusion and delayed market acceptance. As an undercurrent to the hype, there is also a steady drumbeat of cloud naysayers, populating the blogosphere with the opinion that cloud computing is nothing but fog and will fall short of its ideal.

A quick Google search finds articles such as Money magazine’s “Cloud Computing is for the Birds” and AdAge’s “This Cloud (Computing) Has No Silver Lining,” which present arguments and opinion that cloud computing is not all as promised. Even respected McKinsey & Company released a study last year that painted the cloud in shades of dark gray saying that while the cloud provided some benefits for smaller companies, large companies could lose money through cloud adoption. And industry luminaries such as Larry Ellison continue to rant against the cloud as old news, nonsense and water vapor.

There is even a Facebook page devoted to debunking the cloud suggesting “Join if you think that cloud computing is a horrible idea” and posted commentary like “It's a funny word for "web services". It's been around forever, and it still kinda sucks. Calling it "cloud computing" doesn't make it any more practical.”

This skeptical opinion also appears to permeate some large corporations, like P&G, as reported by VentureBlog. “What is interesting, however, is that one thing they aren't trying are cloud services. It was made clear that P&G runs everything behind their own firewall. And they have no intention of moving any part of their infrastructure into the cloud. P&G's view of the enterprise is pretty old school.”

This presents a challenge for companies bringing cloud-related products and services to market. Not only must they present a compelling case for their individual success, they must present a solid argument for cloud computing.

We welcome your comments and opinion on this topic:

Is the skepticism of the cloud well-founded?
How might companies rise above this fog of negativity?
What companies are doing a good job with the cloud?
Is any company other than Saleforce.com doing a good job of marketing cloud computing?

Real Men Have CAD

“Real men have fabs.” That famous quote from the early 1990s, is usually attributed to Jerry Sanders, Chairman of Advanced Micro Devices, and was used to underscore the belief that owning a semiconductor manufacturing facility, or fab, was the only way a semiconductor company could be successful.

Many innovative chip companies saw things differently, however, and by the mid-1990s there were many successful “fabless” semiconductor companies. These pioneers realized that the $1-2B it cost for the construction of a new fab every couple of years was not only prohibitive from a cost perspective, but also not necessary at all.

These chip makers turned to TSMC, UMC, Seiko-Epson and even IBM for the manufacturing of the wafers and chips, while focusing their efforts on design innovation, testing and marketing.

By the mid-1990s, many of these fabless chip makers were among the most profitable companies in the semiconductor industry.

Fast forward to today.

The continuing economic downturn has forced all companies to take a hard look at cutting, or at least managing, costs. The semiconductor industry is no different from other markets, and every chip maker is looking for a way to turn fixed costs into variable costs.

In his post on Xuropa last year James Colgan said that one way semiconductor companies plan to turn fixed costs into variable costs is by moving parts of the EDA (electronic design automation) flow to a SaaS model, where components of the semiconductor design software reside in the cloud.

Clearly there is a trend in the semiconductor industry to take advantage of cloud computing as a way to reduce costs. The chart below shows the adoption curve for many of the EDA modules migrating to the cloud.

This will have ramifications for how EDA companies such as Cadence, Synopsys and Mentor Graphics market their products to customers. No longer will customers want to purchase costly software design tools, or even licenses to those tools, if they can use them via the cloud on a pay-per-use model. This trend is just now in its infancy, as is the way EDA companies talk about their relationship to cloud computing.

But as rapid as other software applications have moved the cloud, we're probably not too far away from hearing some stubborn semiconductor executive stand up and proclaim that "real men have CAD."

What Cloud Computing Means For Marketers

Cloud Computing has become one of the top trends in technology, with the business world buzzing about the potential and leading innovators like Microsoft to dedicate significant resources to be at the forefront of this trend.

The IT and operational benefits of the cloud are becoming well-known – increased efficiencies, lower barrier to entry for smaller companies, increased flexibility, etc. Even we at 3Point have embraced cloud computing operationally, leading to some nice efficiencies. However, what is the value the Cloud offers marketers? Often marketers turn a deaf ear to technology talk but this is a topic that has the potential to be hugely liberating for marketers, enabling great digital experiences for customers and enhanced revenues for companies.

What is cloud computing? Simply, all the computing infrastructure and intelligence (software, data and servers) is owned and managed remotely by a third party, and accessed via the internet using a web browser. Within cloud computing is software as a service (SaaS). Many of the innovative CRM, marketing automation and social software vendors operate via a SaaS model of delivery. But why is this important to a marketer focused on sales, brand value and customer experience, not how technology is delivered?

It matters because this approach can be hugely liberating for marketers, particularly in enterprises where the IT function is frustratingly slow for marketers trying to keep up with the breakneck speed of changing customer expectations online, and where putting together a business case in new areas of digital may be challenging. Among the primary benefits:

Cost. Cloud services are drastically less expensive than tradition hosting options, so marketers can do more and innovate more with their money. Cloud services enable some basic things such as faster time-to-market as solutions can be built in less time.

Faster scalability to better keep up with the variables of marketing campaigns and user traffic. In the past companies would have to prepare for an ad, email, keyword, or offline-online campaign and get resources ready on standby and have difficulties implementing mid-campaign course corrections. With cloud services campaigns can scale on demand with a lower cost and faster timeline.

Strategically, social services are enabled through cloud computing. New offerings like Facebook Connect, Twitter/delicious/reddit/digg/etc. apis, or even YouTube embed capabilities are all cloud services that enable you to drive traffic to your site without having to build your own social network. Facebook Connect is a cloud service that enables the portable social graph bringing users to your property. One user post back to a user’s Facebook wall results in three more users accessing the site. Customers tried to build social networks on sites like flip.com and other properties, now they can tie into the cloud service and get the same functionality in a fraction of time .

Most importantly, Cloud services allow us to think less in terms of technology architecture and more in terms of the marketing processes and workflow supporting the desired end-result. The Cloud smoothes a lot of technical complexity and assumes everything can be easily and integrated in real-time allowing marketers to focus on marketing and creativity. Blogger Adam Needles captures this idea well in this post and the situation has continued to evolve. We anticipate more and more company marketing departments will adopt the Cloud as a model and this will lead to new innovation in the design and implementation of campaigns.

If technology is becoming increasingly integrated into how you sell, manage relationships and build your brand's reputation, take a closer look at the Cloud. There are opportunities to increase simplicity, enhance control while at the same time lowering costs and increasing flexibility. And most important, providing marketers the opportunity to focus on marketing not IT.