Does Azure have the allure to drive enterprises into the cloud?

Dave Bailey, Computing, Thursday 16 July 2009 at 15:49:00

Microsoft's Azure plaftorm strengthens the appeal of cloud computing, but IT leaders will still have concerns

To date, cloud computing services have garnered more column inches than business customers. Enterprise buyers continue to harbour doubts about putting business-critical applications in the cloud, their chief concerns being security and availability.

But with industry heavyweight Microsoft recently unveiling its massively scalable cloud computing platform, Azure, IT leaders may take a closer look at cloud services.

Azure is due to go live some time in November, with services running from three massive datacentres, one in the US, one in Ireland and the third in Singapore. Further datacentres will be added in the first half of 2010.

Microsoft's Azure platform has three components: Windows Azure, which provides the compute function; a SQL Azure database component; and Azure.Net services, which glue the whole thing together. The prices for each component will vary, and Microsoft will offer various service level agreements.

Nevertheless, Microsoft has some significant barriers to overcome in persuading enterprise customers to move business-critical data outside of their firewalls, says Forrester information and knowledge management analyst Sheri McLeish, not least of which is the disruption it would cause to staff.

"Remember disrupting your workers is one thing you don’t want to do,” she says.

However, Microsoft has already attracted some early adopters, and hopes their experiences will encourage others.

One such early-adopter of Azure will be budget airline Easyjet, which is looking to move to a new departure control system (DCS), called Halo, which would allow it to mobilise a lot of the services that people currently have to queue for, such as baggage drops.

The airline's future plans for Halo might include moving more of its back-end data up into a SQL Azure cloud database, said Easyjet enterprise architect Bert Crave.

Elsewhere, the Royal National Lifeboat Institution (RNLI) is testing an Azure-based system featuring mobile devices that are designed to be worn by fishermen, which activate on immersion and alert RNLI crews via satellite that a person has fallen overboard.

One of the critical parts of any cloud computing service will be the pricing model, and Microsoft is to launch three purchasing options for the service initially: a "pay as you go and grow" option; a subscription-based model that gives discounts if firms make a specific commitment over time; and a volume licensing model similar to that used for Microsoft's enterprise software packages.

"Comparisons with other providers are never easy due to a range of factors, but Microsoft's basic compute unit is in the order of magnitude similar to that of Amazon, at least in terms of a headline figure of $0.12 vs. $0.10 on AWS EC2 [Amazon Web Service Elastic Cloud 2]," said Datamonitor principal analyst Vuk Trifkovic.

“While I don't believe that Azure users should wait for the prices to come down, I could potentially see an incremental drop in price at some point in the future,” he added.

While Azure takes software patching and hardware management out of firms' hands, a critical area for enterprises rolling out applications on Microsoft's platform will be how they monitor usage of resources and track application performance. Configuring an Azure application for optimal performance will require some sharp management tools.

Microsoft's product marketing director for cloud infrastructure services, Prashant Ketkar, says that it will provide application programming interfaces (APIs) that allow firms to use third-party management tools. This will also ensure the platform can co-exist with other cloud offerings.

"We’re totally committed to interoperability, and potentially you could have an application front-ended on Google’s app engine, with storage running on Azure – to the user the service would appear seamless," he said.

Not everyone shares his confidence. A recent report from analyst Gartner, Three Types of Cloud Brokerages Will Enhance Cloud Services, says that cloud services will be too complex and untrustworthy for firms to handle properly unless a ‘brokering service’ is used.

Gartner’s managing vice president and chief Gartner fellow, Daryl Plummer, said that using third-party cloud services and ensuring that they will work, not only separately, but also together, “are complicated tasks, rife with data integration issues, integrity problems and the need for relationship management. Hence the role of brokers to add value to services and to deliver new services built and delivered on top of old services.”

NatWest launches pre-paid payment cards

Angelica Mari, Computing, Thursday 16 July 2009 at 14:30:00

Partnership with O2 enables customers to check account balances on their mobile

NatWest is launching two pre-paid cards that can be topped up from mobile phones in partnership with O2.

The cards under the "O2 Money" brand comprise one product for children – which cannot be used for services such as gambling, in shops or online – and another card for adults, which is pitched as a “cash manager” where customers can "ring-fence their disposable income".

When customers use the cards – accepted across the Visa network and available at the end of August – they will be sent text updates to their mobile so they know how much credit they have left.

“The strength of our brand and relationship with our customers gives us the ideal opportunity to take O2 into a completely new market,” said O2 UK chief executive Ronan Dunne.

“By bringing a fresh, transparent and customer-focused approach to pre-paid cards, we plan to drive this market and take a significant share," he said.

"In partnership with NatWest, O2 Money is delivering new and innovative ways of helping our customers better connect with their money."

The joint venture is the latest move from mobile operators attempting to expand their financial services offering and follows the likes of Barclaycard, which has partnered with Orange to develop new mobile payment technology for transactions under £10.

How prepaid cards work

Simple “closed-loop” schemes, such as campus catering or purchase cards, can use “dumb” memory cards based on technologies such as Philips Mifare. A lower security threshold suits such environments where the greatest loss, for example, is the cost of a Snickers bar. They involve simple read or write security keys.

“Open” schemes, such as those backed by Visa or MasterCard, demand much stronger embedded security mechanisms that prevent duplication or message replay and as a consequence demand more sophisticated microprocessor cards.

Visa and MasterCard pre-payment schemes run on the same infrastructure, and the pre-payment applications can sit alongside other applications on the same card so the use of a pre-paid card is transparent to the retailer.

Read more about pre-paid cards here.

Regulatory changes boost Autonomy results

Angelica Mari, Computing, Thursday 16 July 2009 at 13:28:00

Firm remains “cautiously optimistic” as revenue and profit increase

Profit at UK software firm Autonomy grew by 67 per cent in the second quarter as regulatory changes and lawsuits boosted product demand.

Autonomy posted profit of $50.9m (£30.9m), up from $30.5m (£18.5m) during the same period in the previous year. The supplier has also seen a sales increase: $195.2m (£118.7m) up from $125.6m (£76.4m) a year ago.

The company also added that it won a string of new client deals during the second quarter of 2009, including Barclays, Tesco, Shell, Morgan Stanley, Johnson & Johnson, General Electric and eBay.

“Autonomy’s performance was delivered despite the continued uncertain economic environment and the considerable integration work around the Interwoven acquisition, which is now essentially complete,” said Autonomy’s chief executive, Mike Lynch.

“Despite the continued uncertainty in the markets, we remain cautiously optimistic. We are seeing, for example with our recent significant legal hold licence deal, the second of the three waves of regulatory technology investment,” he said.

“This quarter’s early wins lead us to believe that the new meaning-based marketing technologies will be a strong performer in the period immediately following any macro upturn.”

Intel sees signs of IT spending recovery

Martin Courtney, Computing, Thursday 16 July 2009 at 12:55:00

Chip maker expects upturn in seasonal CPU demand but is still cagey about corporate spending

Chip maker Intel saw revenue for its latest financial quarter dip $1.4bn (£850m) to $8bn (£4.9bn) compared with the same quarter in 2008, but a 12 per cent sequential increase compared with the first quarter of 2009 offers some cause for optimism, says the company’s UK managing director, Graham Palmer.

The company posted a loss of $398m (£242m) for the quarter, but as Palmer points out, those figures are skewed by the funds Intel had to put aside to pay a European Union fine of $1.45bn (£882m) for breaching competition rules. Without that hit, Intel would have posted a $1bn (£608m) net profit – and it is appealing against the fine, so could see the money returned or fine lowered.

Computing spoke to Palmer about the current state of the economy, and IT spending patterns in general.

Computing: The Q2 results beat financial analyst estimates, but year-on-year revenue is down 15 per cent and net income down 35 per cent. Are you hopeful that IT spending will rebound any time soon?

Graham Palmer: The year-on-year view is skewed because Intel saw such an extreme market and inventory correction at the end of 2008, but the 12 per cent increase in revenue compared to the first quarter of 2009 is the best we have ever seen.

We are seeing strong sales in the consumer sector, particularly around ultra low voltage mobile parts for new categories of laptops [Ebooks and netbooks]. There has been 20 to 30 per cent sales growth here, and a lot of new incremental business from the Atom chips. But the challenge is in the enterprise space.

When do you think corporates will start buying again?

That is the tough question. Clearly Intel tries to get as much visibility into the market as possible, but we do not have a crystal ball. In the meantime all we can do is continue to invest in new technology and new manufacturing processes. The macro trends in Q2 2009 hide some of the specific highlights, like Intel’s next-generation Nehalem chips, which already make up a third of all dual-socket CPU sales in what is a very tough server market right now.

What is most likely to prompt corporate investment in new architecture, if anything?

We think we have some very compelling corporate client technologies and the key piece of the puzzle will come when those customers come to refresh their aging two- to three-year-old datacentre infrastructure. They already recognise they need to look at the increased performance and manageability available in newer technologies, as well as server energy consumption, to maximise operational efficiency.

Intel’s gross margin grew despite CPU average selling price (ASP) declining, how was that achieved?

We have continued to focus on driving costs out of our own business and moving to a 32 nanometer manufacturing process has helped with that. The value of Intel inventory was down $240m because of a large correction in the amount we are holding, which is still a little bit below where we would expect it to be.

More importantly, the inventory in our customer channels is now at normal levels, whereas the backend of 2008 saw an extreme correction in that supply line as customers tried to flush out stock as quickly as possible in the face of low demand. They have now recognised that demand is starting to return.

One way to maximise revenue is to sell more chips into mobile phones. What is Intel doing there?

We intend to rapidly move what we are doing with the Atom CPU product lines into the handheld and embedded device market, including those mobile and pocket devices with 5-7in screens that will benefit from 32nm chips that consume less battery life. Part of that will come from the $884m (£538m) WindRiver acquisition [a company that specialises in embedded systems], and our future strategic direction as indicated by our partnership on mobile hardware and software with Nokia.

MoD awards further communications work to BT

Tom Young, Computing, Thursday 16 July 2009 at 12:00:00

BT and NG Bailey will standardise and improve voice and data network across 197 military bases

The Ministry of Defence (MoD) has awarded BT a £99m, five-year contract to provide voice and data networks across 197 military bases.

The deal forms part of the Defence Fixed Telecommunications Service (DFTS) Agreement that BT currently delivers on behalf of MoD.

The contract will see BT standardising services as well as improve management information and existing infrastructure.

"The commencement of this service for Defence represents a logical and significant step forward in the continuing modernisation and rationalisation of the fixed communication network infrastructure which began in 1997," said Darrell Midgley, head of the MoD’s defence equipment and support’s networks team.

The service - which BT is delivering in conjunction with building services provided NG Bailey - is planned to be effective from 1 October 2009.

Cost claims stir ID cards debate

Tom Young, Computing, Thursday 16 July 2009 at 07:30:00

Tories fail in attempt to scrap controversial plan, but uncertainty remains over future of National Identity Scheme

The House of Commons last week debated identity cards for the first time in two-and-a-half years after the Conservatives proposed a motion for the government to abandon the scheme.

As expected, the motion was defeated, but the debate proved instructive in outlining both the government’s and the opposition’s attitude to what has proved a controversial scheme in two key areas –­ what will it cost and what the alternatives are.

The Tories and Liberal Democrats have argued that in times of fiscal constraint, the £4.9bn scheme must be abandoned ­ – although they are ideologically opposed to the plan as well.

But scrapping ID cards will not simply save £4.9bn. According to the latest cost estimates confirmed to Computing by the Home Office this week, £3.6bn of spending on the scheme supports the issue of passports ­ – a measure that none of the political parties opposes. So ending the scheme will save £1.3bn at most.

But the issue is complicated further by home secretary Alan Johnson’s claims that this £1.3bn would be recovered by the charges levied for cards.

“Over 10 years, the operating costs of identity cards will be recovered through fees, so they are not a charge on general taxation over that period,” he told MPs during the debate.

“Any initial savings from scrapping identity cards would be offset by the loss in fees that they would generate, which would make a significant contribution to the costs of technology and other systems necessary for the introduction of biometric passports.”

Excluding the £379m budget for the compulsory ID card scheme for foreign nationals ­ – which the opposition supports ­ – at the current fee of £30 per card, the government would therefore have to persuade 36 million citizens to purchase the voluntary cards –­ more than half the population. Only then would the ID card part of the scheme cover its costs, and Johnson’s estimate be proved correct.

Such take-up was only ever going to be likely if the scheme were mandatory ­ – a policy that the government specifically ruled out earlier this month.

Some experts point out that the debate on ID cards is academic ­ polls suggest the Conservatives are favourites to win an election next year and they have promised to terminate the scheme.

However, it is not that simple.

Although the Tories would scrap identity cards and the national identity register ­ a central database of biographical and biometric details ­ the Commons debate revealed they are not opposed to biometric passports.

Furthermore, they are not opposed to collecting the information stored on the passports, according to shadow home secretary Chris Grayling.

“If we had to have biometric passports, the data would clearly have to be stored. [But] I see no need to create a much more substantial database containing 30 or 40 extra items of information that are not necessary in an application for a passport,” he said in Parliament.

This leaves the Conservatives open to accusations that they will introduce a national identity register by another name ­ with the only difference being the details stored on it.

Such a charge is particularly stinging because two contracts worth a total of £283m have already been awarded to suppliers Thales and IBM for the construction of the technology to support the national identity register and the work is under way.

As two other suppliers told Computing, terminating these deals early would have to be done on “convenience” grounds ­ meaning that a substantial termination fee would have to be paid by the government, which some estimate to be as much as a third of the total cost.

The Conservatives claim with some justification that this hands them a “poison pill”.

Nevertheless, for any Tory administration to scrap the contracts, pay off suppliers, and then introduce another costly passport database to perform the same function but with fewer data fields, would not sit well with the economic austerity that must inevitably accompany the first few years of the next government.

Contracts for the National Identity Scheme

• Thales UK was awarded an £18m, three-year contract to manufacture and deliver the first ID cards to students and volunteers, starting this autumn.

• IBM has been awarded a £265m deal to build the biometrics database to support ID cards and passports.

• CSC has been given a £385m deal to upgrade the application and enrolment system – applicable to passports and ID cards.

• A £400m contract to deliver the next generation of UK biometric passports went to smartcard specialist De La Rue.

• A contract for a case management system for the UK Border Agency – again applicable to both passports and ID cards – worth “substantially less” than £500m is still to be awarded.

• A mooted £500m contract for production of the cards themselves has not yet been awarded and is likely to be delayed until after the next General Election.