VMWare describes the shift to the cloud as the most significant shift in enterprise architecture of the decade and that 500 million new apps will be launched in the next five years. Thanks to containers, compute costs are falling by 50%, and resources can be provisioned 450X faster. With Kubernetes going mainstream — a wave of innovative startups can be seen.
Code deployment speed is up 86% from “time to commit” to production. With this need for speed, developers are under pressure. Cloud providers, software vendors, and startups are scrambling to serve up the new kings of the “compute” kingdom – the coding ninjas.
Where is the commercial value of Kubernetes?
Which companies are poised to lead, which startups are the challengers, and which companies face existential threats?
Kubernetes is the new control plane.
Let’s start with Google – by donating Kubernetes to CNCF, it indirectly created a nightmare for VMWare, Docker, MesoSphere (now called D2IQ).
Docker, once a leader in the container world, may have given too much away too soon. Did Docker become a victim of open-source? Clearly, Docker could not commercialize Swarm as Google stepping into the ring.
Google could have easily kept its Kubernetes gems in its own treasure chest. But it threw it out in the open-source world.
Now the fun has just begun. Murli Thirulmale, CEO of Portworx says, Kubernetes (or k8s) is slated to become the “control plane” – the new middleware of the cloud computing universe. Google is rapidly building a set of products to make sure it can win this control plane opportunity.
The economics and growth of containers.
Uber runs as many as 1 million containers per day. These containers are herded together in 6000 nodes in 35 separate clusters. Every time you call an Uber, a few containers pop up, gather the data (your location) compute the estimated time and fare.
As the number of users grows, Uber keeps adding more and more infrastructure to support the containers. For some companies, this infrastructure is run on public cloud-like service, Amazon Web Services (AWS). But there are trade-offs such as costs and compliance. So companies have their own on-prem infrastructure or data centers.
The horsepower infrastructure.
As companies grow, more horsepower infrastructure is added. Airbnb grew from 450 nodes to 2300 nodes in eight months. That’s a 4X+ increase in compute and resources. Alibaba pushed all limits and tested 10,000 nodes.
According to a survey conducted by Platform9, 406 respondents pointed out they will be running 50 or more clusters in production within the next six months. As new applications are launched, the demand for computing resources increases.
VMWare estimates that 500 million new apps will be launched in the next five years.
Gartner and IDC estimates show that 51% of apps will be containerized by 2021, yielding a market opportunity of ~$7 billion. It’s no wonder cloud providers like AWS, Google Cloud, and Azure are rapidly moving in to scoop up the value.
Simply stated, cloud providers charge a fee for compute and memory. AWS Fargate prices vCPU at $0.04 per hour and memory at $0.004 per GB hour. Every time a container is run, it uses the CPU and memory, making a nickel for AWS.
By 2021, over a billion dollars will be spent on paid containers.
That is good news for the cloud providers, who are rapidly dropping prices and building hooks to attract developers. In 2019, AWS dropped Fargate pricing by 50%. Google is making big moves with Anthos and bare-metal to claim its fair share of the cloud pie. But one company is facing the classic Innovator’s Dilemma – VMWare.
The decline of VMs and race for market value
A recent headline in Barron’s weekly would cause stomach-churn at VMWare. ‘Kubernetes’ is the Future of Computing. That’s Bad News for One Stock.’
As Kubernetes adoption rises, companies will shift away from VMWare to open source offerings like Docker and Kubernetes. Gartner predicts as much as 23% of virtualization spend will shift away to containers.
VMWare is embracing containers even though it may cannibalize its own bread and butter.
The VMWare company’s flagship products are now seen as a VM tax. The company has launched several products – Project Pacific, Tanzu, and acquired Heptio, and more recently, Pivotal for $2.7 billion.
But it’s too early to tell if VMWare can shift away from its core paid offering to managing an open-source offering. Between various business units, warring factions, and mixed messaging, the company has its own success as its biggest possible impediment.
Complexity, Talent and Cost drive growth of Managed K8 Platforms
One of the myths of the cloud is that on-prem will go away, even vanish entirely. Not so fast. Besides the multi-cloud universe, we see a growing demand for IoT and edge connectivity, with 5G on the horizon; it creates application management challenges of a new order. These tectonic shifts where new giants will emerge over the next decade, while others will crumble.
A 451 Research report – Hybrid and Multi-Cloud Strategies accelerate digital transformation (2019), points out that 57% of the 571 respondent companies are moving to a hybrid cloud, leveraging both on-prem and cloud in an integrated fashion.
Consistent to that are findings from the Platform9 KubeCon 2019 attendee survey, where almost 50% of 1300 respondents, say that they deploy Kubernetes in multi-cloud, on-prem data center.
Open source is free but has constant version changes, demands for compliance, security, and data governance costs. Above all, what are the hidden operating expenses driving the need for managed services?
The teams managing infrastructure at scale are relatively small. Uber has 25 operations infrastructure engineers. Pinterest has less than 10. For these engineers, the developer is an internal customer.
Infra and Ops teams try to ensure that the developer gets what they need. As quickly and efficiently as possible, while juggling a hundred different low-level issues.
The vast majority of companies will not be able to build their own internal ops teams. Finally, as the price drops and changes occur, companies want to benefit from these economic advantages.
Google has dropped its cloud offering prices by as much as 40%+ over the past three years, while AWS and Azure price drops are in the 20% to 30% range. This race to grab market share will call for the movement of workloads to lowest cost centers.
PaaS = a $5bn market opportunity
A managed service PaaS eliminates most of these underlying issues in this fragmented and messy universe. Gartner estimates the Application PaaS market to grow to $5.8bn by 2021.
In a Forrester report for Enterprise Container Platform Software Suites, the category companies fell into the following buckets.
| Category | Publicly traded | Venture-backed / Private |
| Leaders | RedHat (IBM) | Docker, Rancher Labs |
| Strong Performers | Pivotal (VMWare) | D2IQ (MesoSphere) |
| Contenders | Platform9, SUSE |
Each cloud provider will build their own management layer, but what customers need is a Switzerland of sorts.
Such a platform makes the journey for developers and infrastructure managers easier. In an interview with theCube, Sheng Liang, co-founder of Rancher Labs, mentioned that Kubernetes has crossed the chasm and heading to the mainstream market – ready for prime time.
Kubernetes and 5G – no carrier left behind
Not too far behind the cloud providers are the telco/carriers looking to participate in this wave. Speaking at Kubecon, Azhar Sayeed, — Chief Architect for Telco, Red Hat brought in 15 partners from Bell Canada and China Mobile.
Demo deployed k8s cluster in a data center in France, Montreal, and a remote pop in San Diego. He pointed out use cases where cable operators can use 5G to deploy a millimeter radio to get to each user’s home.
Oil and Gas, Mining, Autonomous cars will all need telemetry and data analysis. Telco is deploying Kubernetes in a private cloud with a public cloud sandbox.
Platform 9’s most recent round of funding was led by NGP Capital, the venture arm of Nokia. Carriers will try to shift away from hardware and switches — to software. But carriers have historically not demonstrated innovation, agility, hunger, or speed. Maybe this “5G time” is different?
The next frontiers – storage, network and security in containers
While computing has been addressed at container layers, a lot more needs to be done. Kubernetes becomes the control plane but container storage, networking, and security are ongoing areas of development.
With stateful containers becoming more prevalent, innovative startups like Platform9, Portworx, and Tigera have attracted Global 2000 customers at a rapid pace.
Murli Thirulame, Founder and CEO, says that disaster recovery (DR) and backup will bring about a rapid K8 adoption in financial segments.
“Security is no longer at a host or IP level, but clusters, namespaces, pods, and as a separation between developers and operations becomes thinner, security shifts to the Ops team,” says Amit Gupta, VP of Business Development at container security company Tigera.
A lot needs to be done as adoption of K8 grows. Startups are leaping ahead to solve the new problems, and a new wave of technology companies will rise as we enter the multi-cloud world.
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