At long last, March 9 is here.  Cisco had a running timer on its Web site counting down to 11 a.m. eastern this morning when they would make an announcement that, they claim, would change the Internet forever.

Based on the hype that Cisco and much of the media created, I’m not sure what I was expecting but my expectations were high.  So what was it?  Today Cisco launched its new carrier core router, CRS-3.  The CRS-3 is the evolution of a product Cisco launched a few years back, CRS-1, which, at the time, set the high water mark for carrier routers.  Upon its release, many people chuckled at the concept of a 92 Tbps router, thinking we’ll never need that kind of bandwidth, but what we found was that indeed we do!  Cisco has shipped almost 5000 CRS-1’s–clearly, there’s demand.

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More than 25 percent of Yankee Group survey respondents say they expect at least a third of their infrastructure to move to cloud computing in the next 12 months, but company-wide adoption remains low. To uncover what lies ahead for cloud computing in 2010, Yankee Group interviewed executives from 25 cloud computing pioneers—including early cloud service providers, telecom operators, and infrastructure and software vendors. Their unique perspectives and key strategies tout the power of the cloud and offer a view into its impact: Will cloud computing be an evolution or a revolution?

Zeus Kerravala and I were delighted to have three cloud thought leaders join us for today’s webinar:

• Doug Hauger, General Manager, Microsoft Windows Azure
• Raj Nathan, Executive VP and Chief Marketing Officer and Senior VP, Sybase
• Jayshree Ullal, President and CEO, Arista

The discussion was lively and thoughtful–a special thanks to each of them for taking the time do join us. A replay of the webinar is below. We’re also offering a complimentary download of the report that inspired this webinar: “Clouds in 2010: Vendor Optimism Meets Enterprise Realities.” Register as a guest for access.

The webinar runs about an hour: audio (mp3) and slides (pdf).

While researching my new book ANYWHERE: How Global Connectivity is Revolutionizing the Way We Do Business, I had the good fortune to speak with over 50 connectivity thought leaders. I’m using my blog to periodically share some of the insight that didn’t fit into the book.

In this excerpt from my interview with Paul Sagan, president and CEO of Akamai Technologies, which provides managed services to power the performance and delivery of rich media online, dynamic transactions and enterprise applications over the Internet, we discuss the path to ubiquitous connectivity, obstacles to its growth, and how connectivity is accelerating human evolution.

Paul Sagan, President & CEO of Akamai Technologies (c) W. Marc Bernsau

How is connectivity changing over the next five to 10 years? What’s happening to the network from where you sit?

This is a consumer answer to your question, but I do believe this change will help power business things, too. We’re starting to see the Internet becoming television, replacing the giant gorilla in the home. Call it the HD Web, if you will. You will be able to get competitive quality, variety and control over your ‘IP television’ (that’s an incomplete term, but I don’t yet know what to call it) better than you get with conventional TV today. At Akamai, we are starting to deliver live TV streams of HD-type quality, using the term “HD” loosely. A majority of viewers are now selecting the higher-quality video streams over the lower-quality ones.

We handled the NCAA March Madness [U.S. college basketball playoffs] on the Web for CBS this year, as we have for some years now. This wasn’t the first year that they had cable-network-size audiences. We served hundreds of thousands of live simultaneous viewers, but for the first time, a majority of those viewers selected video streams of 1 Mbps bandwidth or greater. That’s a stunning milestone. And that’s in the U.S., where the potential audience has very low penetration of FiOS-quality broadband to the home.

You could argue that’s not ‘true’ HD, not Blu-Ray quality, but it’s more than watchable—after two beers, you can’t tell the difference, and maybe that’s always how college basketball is watched. ‘Two-beer HD,’ maybe we should call it.

What that means to me is that the Internet is now a challenge to TV. If you extend broadband growth out three, five or even 10 years, it’s still a pretty short horizon. TV gets fundamentally changed, and from there, so does gaming and all home entertainment. That is a sea change in the economy. All of home entertainment was completely analog until not that long ago! That affects all sorts of businesses.

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After months of collaborative works with a team of seasoned analysts, our special report on cloud computing entitled Clouds in 2010: Vendor Optimism Meets Enterprise Realities finally came to a completion. Our interviews with 25 cloud computing thought leaders about technology milestones and their metrics to measure success were inspirational and thought provoking.

On the agenda of the business executives we interviewed, cloud computing is an act for action. From enabling the use of cloud computing services to deploying enterprise-specific cloud computing models, business leaders are full of excitement. Their optimism is not without reason.

First, the new economic reality is driving enterprise customers to look for innovative IT solutions to keep their businesses afloat, if not prospering as they used to be. Also, technology barriers to move workloads into the cloud continue to fall as more vendors are taking an active role in addressing pertinent problems associated with service reliability, security, and interoperability. It could be in the form of strategic partnerships such as the technology coalition between Cisco, VMware, and EMC to boost the deployment of enterprise-class private clouds; and goal-oriented investments such as the acquisition of Cassatt by CA to expand its expertise in meeting the changing requirements of today’s data centers.

I agree that these are good signs of a potentially innovative market development. But healthy market dynamism should be based on a fine balance between an optimistic supply and a realistic demand. With growing pressure to control costs without compromising performance, one can only guess today’s corporations’ next moves. How do enterprise customers approach cloud computing in these days? Are they approaching the cloud with greatest ease?

The recent history of IT transformation in the business world should be a good indicator. On the demand side, business transformation initiatives are far from ending. From bandwidth utilization, IT automation, to cloud service management, the power of cloud computing has whetted corporate appetite for productivity at low cost. The growing availability of IT as a service will essentially shift IT’s role from managing hardware and software to managing services and providers.

Will 2010 be a banner year for cloud computing? Let’s prepare to review the special report with multiple lenses.

Farewell to the Noughties, a decade sandwiched between two crises: The dotcom bust and the current – but sputtering – downturn.  In that time, Europe accomplished much: The Euro was adopted, DSL went mainstream and telcos went NGN.

Not least, consumers woke up to the pleasures of mobile content, although it’s questionable whether MNOs will ever see a fair return for their expensive 3G licenses. Roaming charge crackdowns and market saturation haven’t helped financials either.

Time again to put a nebudchadnezzar on ice? There’s plenty under the tree for 2010:

1. Ethernet will be everywhere. Ethernet is in the LAN, it’s in the WAN, it’s transforming mobile backhaul economics, and it’s converging the datacenter. Fiber remains best, but clever vendors (see Hatteras, Actelis) are delivering copper-bonded Ethernet in the first mile. And new Ethernet exchanges (see CENX and Equinix) aim to speed order to cash with their interconnect services. Want a unifying communications fabric? Well duh!

2. The CDN bubble will burst. Telco CDNs can offer compelling features, but how many service providers can the market sustain, even if video traffic is exploding? Many partnerships are already in place: Tata Communications with BitGravity, Verizon with Velocix, Deutsche Telekom with EdgeCast and Global Crossing with Limelight Networks and EdgeCast. If you’re not in the game now, you’ll need deep pockets to buy in.

3. The cloud’s hot air will expand. Resilient, liquid (and probably Ethernet-based) connectivity is going to save the outage-prone cloud. To invest in cloud services enterprises require robust network as well as applications-specific SLAs, as well as network redundancy, say Yankee Group enterprise surveys. Offering on-demand VPN connectivity to cloud services (on a wholesale or retail basis) could help defuse concerns about their security and resilience.

4. Equipment vendors will want to be your new best friend. The ratio of CAPEX to revenue currently stands at 12.6 percent among European operators, according to Yankee Group analysis. It’s not going to recover much. That’s why European equipment vendors like Alcatel Lucent, Ericsson and Nokia Siemens Networks are on a charm offensive with managed services propositions and aims to transform telco business models. Listen to their pitch. And talk to Huawei:  With a new SDP partner program and growing software division, it’s got more in its arsenal than cheap kit.

5. Smart wholesale will become sexier than dumb wholesale. Get big, get niche or get out. Embrace revenue-sharing models with non-traditional partners. And work mobile angles: International remittances, GRX to IPX interconnect, content transcoding, white-label mobile UC and M2M are among many rich avenues of investigation.

Best wishes for the New Year – and decade – look forward to continuing the conversation!

Earlier this week, IBM revealed its financial commitment to invest further in cloud-enabled facilities; building the 80 million ( New Zealand dollar) worth of data center in Auckland, which is scheduled to be completed in 2010, and adding a new research laboratory in Hong Kong for the development of cloud-based collaborative applications.  According to Joe Dzaluk, vice president of infrastructure services at IBM, investing in new facilities is part of the company’s three-year program to update and expand its worldwide network of 488 data centers ( including both IBM owned and client data centers managed by IBM).

From a quantitative point of view, having a total of 488 data centers is already a fairly resourceful asset.  Seemingly, IBM is not investing for quantity purposes.  What is the motive behind the move?  How can the technology giant possibly profit from its infrastructure investment?

IBM is making its bet on two enterprise demand trends, namely data center outsourcing and cloud computing adoption.

Data center outsourcing is not a brand new demand but there is a sign of growing in the mid-sized and large enterprise segments.  As CIOs come to terms with rapid equipment depreciation, increasing power consumption, and surging maintenance costs,  data center outsourcing makes business sense.  Together with the constant pressure to reduce costs and control IT spending, more and more business organizations are turning to IT outsourcers for help.   This is evident in Yankee Group Anywhere Enterprise—Large: 2009 U.S. Transforming Infrastructure and Transforming Applications Survey, one-third of enterprise respondents( with 500 or more employees) stated that 50 percent  or more of their data center resources are outsourced to a third-party provider for management and support.

In bad economic times, cost-savings is an obvious entry point for any emerging technology to get the attention of potential customers. The economics of cloud computing has caught the attention of enterprise customers that are looking for operational efficiency without compromising performance. As the economy has yet to fully recover, costs will continue to play a role in driving enterprise cloud adoption. According to our survey results, 59 percent of enterprise respondents (with 500 or more employees) estimate that more than 30 percent of their internal IT infrastructure (such as servers and applications) will shift to cloud computing services in the next 24 months.

For IBM, the two enterprise trends represent a tremendous growth opportunity.  But still, the technology giant is mindful when making its strategic move elsewhere.  Evidently, Asia Pacific is a region of growing interest for IBM to harness the cloud.

Will Asia Pacific be the direction of cloud diffusion?

The economic crisis proved a major obstacle for consumers, enterprises and network builders, and each has had to evolve to survive. The changes from 2009 will create new opportunities in the Anywhere ecosystem, especially in the areas of cord-cutting, devices, cloud computing and network innovation.

Earlier today, I was joined by my colleagues Jon Paisner, Camille Mendler and Josh Holbrook to unveil Yankee Group’s top predictions for the 2010 communications industry. We discussed six of our eleven published predictions and took questions live from the audience. Check out the webinar replay below. You can also register as a Guest on the Yankee Group Web site to get the full report for free.

The webinar runs about an hour: audio (mp3) and slides (pdf).

“What the hell is cloud computing?” After a year, those infamous words of Oracle CEO Larry Ellison still resonate. The definition of cloud computing is hazy at best, and many companies remain wary of the technology over concerns about infrastructure, security and regulation.

Cloud computing has unique potential to save the enterprise cost, reduce complexity and provide highly available service to the end-user or client. With such compelling benefits, companies should look to understand cloud better—what it is, what it isn’t and what it will be.

Earlier today, Agatha Poon and I hosted a webinar where we defined cloud computing, explored the capabilities and challenges of the technology and advised enterprises what cloud can do for them.

The webinar runs about an hour: audio (mp3) and slides (pdf).

To set the tone for cloud discussion, Yankee Group published a report last August to share our definition of cloud computing.  As we proceed the discussion with our enterprise clients, service providers, and technology vendors,  a few observations surface.

Although cloud computing has yet to reach mainstream popularity in the corporate world, CTOs are strategically reviewing various deployment models with great interest.  On the supply side, interviews with cloud-enabled providers reveal that there are a lot of activities already underway to support enterprises of all kinds.  What are the promises and pitfalls of existing cloud offerings?  Which business model will win the heart of enterprise customers in the near future and why?

Camille Mendler and I will be hosting a webinar named ” Pinning Down Cloud Computing” on 9/29/2009 at 11:00AM EDT to discuss these questions and more.   Stay tuned.

Cloud-like business models are all over the map. “Cloud hosting”, ” Managed public cloud”, “Virtual private cloud” and among others are flooding the market in leaps and bounds. Every provider seems to have a cloud computing story to tell. You may begin to question the credibility of some cloud-based offerings, if not all. You are not alone. Lately, I have received a number of inquiries asking for the clarification of emerging cloud computing models and cloud strategies.   What are considered as cloud offerings; what are not?  Is cloud computing simply a resurgence of the mainframe era with a new twist?  If  cloud computing is the future of Anywhere IT, where are we at this point in time?

I believe some of the answers to these questions will evolve over time as market dynamics continue to take shape.  But still, to be able to engage our clients with a flow of fruitful discussion about cloud computing, we must first bring clarity to the cloud.   Our latest Yankee Group Report, “Pinning Down Cloud”, written by a team of analysts covering various aspects of cloud computing, lays down the definition of cloud computing.

In essence, we define cloud computing as ” dynamically scalable, virtualized information services delivered on demand over the Intenet with multitenant capability, service-level agreements (SLAs) and usage-based pricing.”  We go on discussing the core components of cloud computing used in our definition.

Using this definition, it becomes clear to me that the majority of today’s hosting soltuions are no more than  repackaging of traditional applications with a “cloud-ish” label.  The lack of scalability and automation mechanism to support dynamic service provisioning  is a showstopper for hosting providers to create any credible cloud offerings.  Scalability and automation are a baseline; providers also need to look at the broader context of how such capabilities are used to transform enterprises, their employees, partners, and customers.  This may require years of hands-on experience and practice.  By then, providers should have the right tool and skill set required to play a different game in the cloud computing arena.  Surely not the name game, but one you can win.

What game are you playing?  Do you have the right skill to harden the cloud?