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Realizing the Bounty of Free Computing

November 15th, 2008


We are awash with a unprecedented abundance of Free* computing capacity.  The equivalent of millions of servers, hundreds of millions of PCs and who knows how many mobile phone handsets, referring to the unused capacity on machines bought, paid for and running.  See “It’s Not a Cloud.  It’s a Mine.”  In addition, we have thousands of Free Applications (FreeApps) available via Web 2.0.  We have hardly begun to realize the potential wealth — scientific, social, educational and monetary — that could be unlocked by virtue of exploiting this capacity.

Evidence of the Theme, present today:

We have rich 3d simulated space in which to:

  • Collaboratively develop insight, knowledge and overcome our limited human ability to perceive scale.  Example:  Second Life Drexel Island with avatar-sized molecules rezzed to view, interact with, and experience how they dock with proteins, etc. Free.
  • Collaboratively develop new insights by rezzing data in novel structures in which to interact, view and experience them.  Example:  Second Life Data Visualization;  Green Phosphor Data Visualization; and Sun’s Project Wonderland.  Free and almost Free.
  • Modify physics engine to better understand interactions of materials on at nano-scale, for example.
  • Modify physics engine to simulate a Mars expedition, for example.  No reason we couldn’t create a Mars mission simulation and let the 5 to 8 y.o. kids of today (Club Penguin and Webkinz digital natives) play with it, creating an impulse to the right educational track and to create an abundant pool of qualified crew candidates 20+ years from now.  Free to use.
  • Eliminate geographic and language barriers for those who may have reason to come together to solve a problem, learn a concept, evaluate a medical outcome.  Free.
  • Overcome physical and social barriers.  Simple example:  allow a handicapped person to experience and express some human interaction such as dance, not otherwise available.  Free.
  • Amazon with EC2 and Google with App Engine, attempting to monetize directly and indirectly (new business models, perceived stock value, etc.) spare computing capacity through Utility Computing. Almost free.
  • Paraphrasing Clay Shirky from Here Comes Everybody:  It is now cheaper to just try something on the web than it is to do the analysis as to whether or not it will work.  Almost free.
  • Seti@Home achieved 528 TeraFLOPs via 334,155 active computers in 210 countries, as of August 2008.

Missing Pieces:

Meanwhile, I note the elements missing in order to take advantage of this great abundance of our time:

  • Educated and informed practitioners who can identify the problems to solve, formulate them in a manner which allows Utility Computing and Free Apps to solve them
  • Informed business leaders who understand the power of the abundant and free computing that can be brought to bear on big problems, and can most importantly frame the value propositions such that we can attract and fund talent (not so free) to solve them
  • Leadership.

* I am taking license to define “Free” as any cost less than a Starbuck’s latte grande, on a per month, week or day basis (haven’t decided).

Mining Global Computing Reserves

October 20th, 2008

Mining for Silicon Gold

Mining for Silicon Gold

In my last post, I asked you to switch the metaphor for abundant free (at the margin) computing from clouds and Cloud Computing to mines and miners. What you find in the mine — the water, oil or computing — is valuable when you use it.  Seems obvious for water and oil.  Computing is valuable too, but takes a little more thought to get a handle on it.

Let’s consider the provider side of cloud computing, and turn to the really big mines. Google, Amazon and Facebook, for example, operate sites that are run by thousands of computers.  Business Week reports estimates that Google probably has in excess of 500,000 servers, Facebook going from 10,000 to 50,000 servers, and so on.  I speculate Amazon employs some number of servers between Facebook’s and Google’s.  These are big numbers, and while servers are cheaper than ever to buy, 100,000 of them represent a significant capital commitment.

Why so many?  So you and I get a great experience.  Take Amazon for example.  Amazon is one of the best experiences on the web, and almost all those pages are assembled just for you on the fly.  All done for the mission of creating a compelling experience in which to buy what Amazon sells.  It takes considerable horsepower to put it all together just for us, and considerable scale to deliver it to thousands, perhaps hundreds of thousands, simultaneously.  The scale has to deliver the good experience on peak shopping days like the day after Thanksgiving, or the days leading up to Christmas.  A poor experience, a slow session, or an unavailable connection directly leads to missed sales and loss of revenue for Amazon.  So Amazon has excellent, quantifiable business reasons to invest capital in scaling its computing resources.

But what of other days, like April 15th when you and I are standing in line at the post office to file our tax returns, not shopping at Amazon?  That pre-Christmas shopping capacity is idling.  The gap, the difference between the computing capacity present and paid for, and the amount actually being used by Amazon at any given time, is the free computing to which I refer.  Invoking our metaphor again, Amazon is sitting on a huge mine.

Let’s review the direct reasons why a mine owner like Amazon, might pursue becoming a cloud computing supplier.  Managers have a duty to increase enterprise market value (EMV).  I use the EMV framework so often used in calculating value of a corporation and its stock, because it is an excellent mechanism for translating seemingly arcane issues into something that executives, employees and stockholders care about.

EMV Lever

Achieved by

Profitable revenue growth Selling unused computing cycles
Reduced operating costs


Tax minimization Realizing computing costs in high tax domiciles
Fixed capital efficiency Higher utilization of computing assets
Working capital efficiency


I include a couple of levers which are not applicable for a cloud computing supplier – because I want to keep the framework intact so that we can return to it again in the future.  In any case, see Supercharging Supply Chains by Tyndall, Gopal, Partsch and Kamauff for an excellent, practical overview of EMV.

Profitable revenue growth is straightforward – selling something you have already paid for.   Fixed capital efficiency is likewise easy:  if you have $10 million or a $100 million in servers, it makes good sense to use them for all they’re worth.  If you don’t, you’re better off leaving the server money in a bank earning interest.

Tax minimization is a little more nuanced.  First, taxes take cash out of the free cash flow stream, which is a critical contributor to EMV.  A corporation like Amazon, Google, and so on, will have multiple data centers and operations in multiple locations.  Computing the likes of which we are discussing here, can be shifted reasonably from one data center to another, subject to some limits like latency (which is one of the reasons to have multiple data centers in the first place).  Some operating costs can therefore be shifted.  In a like manner, personnel with their costs to manage the computing resources can be shifted.  All other things being equal or normalized (talent, energy, risks, etc.), a company is usually better off to spend the money – that is to take the costs – in the region with the highest effective tax rates.  Why?  Greater deductible costs result in a lower tax bill, which is cash lost permanently from free cash flow, and hence detrimental to EMV.

As much as I appreciate the classical EMV levers as business drivers, I like the indirect drivers for a credible cloud computing supplier even more.  Selling, or even giving away, computing capacity makes them better!

Think about it.  Glass houses let outsiders see your stuff (silicon dioxide, the substrate for processors, is glass BTW, making ‘glass house’ a rich double entendre as we speak of Google, Amazon and similar).

Opening up one’s servers to the public requires the traditional support processes such as billing, customer service, training, communications, etc.  These are not unique to cloud computing, and a company has a reasonably good chance of being good [or bad] at these processes without regard to computing.

There are a number of processes that are distinctive to computing including design, operations, risk management, testing, performance management, governance, training, communications, help desk and security.  These are critical IT processes that challenge most companies internally.

To expose these processes to customers and the public requires solid grasp of the operations, confidence in the management processes, and commitment to make everything better.  In short, these companies have to do these things so well, that they are confident to enter competition – and that competition will make them better.

I want to stress a point which is even sharper for Cloud Computing.  The internet is largely enabled by open source software and technologies, with the ubiquitous, free and open source LAMP stack as the poster child.  These are wrought by legions of very smart, very talented developers motivated for many reasons.  Mostly volunteers, they are not employed or paid to make the software and the tech of the internet better, which they do regularly with passion.  They care about building and maintaining cool tech, and earning recognition for their personal genius.  They care about reputation and they care about each other.  They do not suffer ‘lame’ software lightly, nor will they accept marketing hype at face value.  They are fiercely independent, not quiet and not passive.  At this early stage of cloud computing, these people are the Consumers and if a company wants to engage them, the company has to ‘have game’ sufficient to earn their participation and respect.

Fortunately, at least three of the largest mines for this kind of computing, Amazon, Google and Microsoft, have the people and skills to engage successfully with the cloud computing consumers to which I refer.  I am sure there are others, I simply haven’t looked.  All are publicly traded companies, which brings an additional driver of excellence – market perception.
Computing is a core competence of these companies.  Embracing cloud computing, with the forces for excellence it brings to their internal processes and systems, makes these companies better.  — db

It’s not a Cloud. It’s a Mine.

October 16th, 2008

If you don’t already know about Cloud Computing, look now because the field is abuzz and smart people are talking excitedly about it. You’ll feel good. If you wait until the inevitable post-hype cycle crash, you won’t get as much information and you certainly won’t feel good.

Cloud Computing is a whimsical term our tech culture adopted, and we could have done better.  I understand why we landed on the cloud label, as I contributed.  You see, we all put fluffy cloud images on our slides in place of the tedium and scale of the networked computer architecture, hardware and software that is the internet.  It was all too easy to answer “It happens in the cloud,” in response to too many questions.  Our fault.

Now money is flowing into Cloud Computing and expert marketing people are busy recycling a bunch of old stuff with a Cloud Computing label.  Pity, because the predictable after-the-hype hangover will disenfranchise too many people from the merit in cloud computing.  And we desperately need their creativity to mine this untapped resource.

Obscured by the Cloud label, is an incredibly important point.  We are awash with more free but unused compute capacity than we can imagine.  I am sure that the current unused capacity far exceeds the total computing capacity, used plus unused, that existed on earth during many periods in my lifetime.

Free computing.

Our computers include servers which are the workhorses of the enterprise and the internet.  Millions of servers.   Netcraft has a survey of websites that would loosely correlate with the number of web servers (remember that many small websites like this one may be hosted on a single server, while big websites may employ thousands of web servers).  There are many hundreds of millions of personal computers and workstations, networked to the servers and each other. Forrester says there will be over a billion personal computers in operation by the end of 2008.

Stay with me.  Think about a running computer.  You bought it, powered it, cooled it and tended to it.  You spent your money.  Now that computer computes whatever you load, and in so doing is consumed some amount – say, 90% or 50% or 10%.  Then you add some additional compute load such as 1%, so the total becomes 91% or 51% or 11%.  That incremental amount doesn’t cost any more than you already spent.  At the margin, it’s free.

Now the sticklers will say, “You’re wrong, it will use a little more power and a/c.”  Technically, they’re right but it doesn’t matter.  Still free.  And the reason they are negligibly right is slightly perverse:  we are so rich with computing abundance that designers add capability to throttle back computers when not fully loaded.  Can you imagine explaining to Galileo (1564 – 1642)  or Copernicus (1473 – 1543)  that modern man is so rich with marvelous computing machines that he devises clever ways not to use them?

Calling it a Cloud does not help us think about the opportunity to use our abundant, free resource.

Let’s try another metaphor:  think about your house with a big yard, and a deep hole you dig into the ground.  You spent good money on the house, land and shovel.  At the bottom of the hole, you find water, oil or free computing.  Whether you use the water, oil or computing doesn’t change what you already spent on the house, yard and shovel. You found Computing Resources.  Mine and miner illustrate much better what’s going on with Cloud Computing, than clouds, in terms of finding and exploiting computing resources. (I realize holes where water and oil are found are wells, but ‘mines’ works too for purposes here.)

Mining for Silicon Gold

Mining for Computing Gold

(Illustration was created using Powerpoint.  Noncommercial reuse with attribution permitted.)

How big are our global computing reserves?

Before I make the calculation, you must understand this estimate is prototypical and for the purposes of illustrating the abundance.



Current Utilization

Potential Utilization

Net Available Equivalents (Millions)











If my numbers were to hold (i.e., not pulled out of thin air), we would have Global Computing Reserves in excess of 5 million servers and 500 million PCs.

I expect to get vigorous advice about the numbers being wrong.  And just as with global petroleum reserves, the ability to estimate the reserves does not translate into the ability to produce them all.  Unlike global petroleum reserves, we are briskly creating additional global computing reserves. By the way, I did not include mobile telephone handsets, an increasingly important and powerful set of networked computing resources.  Nor did I include the graphics cards in PCs, which are powerful computers barely used except when gaming or viewing Youtube.

So my numbers may be wrong.  Bring better numbers and your own method of making the estimate.  Even if I am over by 2 orders of magnitude, the net available computers may be between 1 and 10 million.

Hey entrepreneurs (miners), free computing!

Let’s use it.  Here is where the creativity I longed for far above is so desparately needed. – db

Is the internet more real than TV?

September 30th, 2008

Like so many with a vested interest, I am bombarded by coverage about the current credit crisis.  My office television is often tuned to a financial channel such as CNBC, and positioned behind me as I normally face the computer screen.  I swivel 180 degrees from the computer to view the TV and vice versa.  Both screens deliver video content.

The crisis set up a situation where executives from a large financial services firm were on television to address the crisis, and presumably reassure us.  The TV piece went just like you would expect – they said what they had to, didn’t say what they couldn’t and got away clean to a commercial break.  The hosts where satisfied.  The lawyers had no reason to be alarmed.  In short, just what you would expect to happen, happened.  So much so, that even in a crisis where I am keenly interested in the firm’s affairs, it was easy to ignore.  Like the background music playing in the lobby.

A few moments later, I watched a video on my computers from the same financial services firm.  Same subject, same motives, same high production values for the content.  The big difference was my reaction.  I became progressively more anxious, even alarmed as the executive recited the disclaimers and reminded us that money market funds can lose money too.

OK.  Video on the TV and video served from the internet are different on the surface – size, format, quality, etc., but that would not account for my reaction.

The difference that matters relates to our expectations.  It’s how we look at the content and the people who deliver it on the internet versus how we look at content on TV that makes all the difference.

When I look at TV, I expect it to be professional in all respects:  writing, performance, production and delivery.  I expect the content to be safe and routine.  Scrubbed.  I am accustomed to the TV rhythms, and know when to tune out.

Video content on the internet is different.  The Amateur rules this domain, the land of the long tail.  Content is unrefined, often unlicensed, sometimes illegal — causing me to screen it through different mental filters.  Professional content stands out and seems peculiar somehow.  And when I do see professional content, I may be viewing it from someone who does not have a legitimate license to be showing it to me.  In summary, I am on guard.

Back to the scene in my office with the two screens, same financial organization,  and same crisis.  I know all the caveats:  read and understand the prospectus … yada, yada, yada.  But when the polished exec guy trained and conditioned for TV came to my internet, and recited the boilerplate message that I could lose money with his organization, I found myself becoming alarmed.

I was already on high alert watching internet video content after all.  And I already knew all the caveats to attach to whatever this executive said.  To recite them on the internet, caused me to ask:  ‘In this dangerous environment, why is this guy telling me I can get hurt – which I already know?’  I was having trouble tuning out what I normally tune out on TV.

Thinking about it, I concluded I was expecting a real person, an amateur like me, on my computer screen.  I was expecting a fellow internet citizen.   Someone who takes personal responsibility for what they say and do.  Thinking harder, I expect many of the same things I expect from people in my physical world community.  Driving this point home, the financial services firm is in my geographic region and if I ran into the executive at the local diner, I would be alarmed if he recited disclaimers to me in a conversation.

On TV I expect actors and news readers.  TV people deliver content that is packaged, scrubbed and delivered without necessarily being processed deeply if at all by the person delivering it.  Perhaps this is why we attach so little to anything our politicians and elected officials say on TV.  And this notion that TV content is usually not owned by the person saying it may be why conspiracy theorist is a gainful profession these days.

It is my internet and our internet.  We share responsibility for the content.

If you are an executive in a company and you want to speak to me via video on the internet, I expect you to be more real than TV requires of you.  Better educate your lawyers and public relations handlers fast.   – db

Welcome to CrustyBytes

September 23rd, 2008

Welcome to CrustyBytes, where as the tagline suggests, we focus on the connectedness of technology, business and brains.

Despite the fact that technology and business have been around for a very long time, their interplays are relatively immature – leaving lots of opportunity for CrustyBytes to add novel ideas and commentary.  Of course, there are segments of publishing and media industries trying to do the same, making for a ‘big pond.’

Since we all have one, and it is the oldest of the three domains, ‘brains’ seem to be obvious, ubiquitous and potentially uninteresting.  Not any longer. Striking is the difference between the resource we put into building computer apps that run behind the screen, versus the effectiveness of the same apps as they play behind the users’ retinas.

Something profound has been happening over the last few years.  Information and insights into how we make decisions, behave, react, move and even think have emerged.  It is as if the brain owner’s manual not provided at birth is getting filled in and slowly revealed to us.   Now some may say:  “It was there all along, and you just weren’t looking;” or “It was always available, you just didn’t find it;” or perhaps, “You didn’t understand the [scientific or medical] language in which it was written.”   I don’t think so!

What we are seeing is neuroscience going open source.  Engineers, writers, academics, doctors outside the neuro-specialties and other amateurs are now participating.  This should be no surprise and appropriate, as we are all owners after all.  Brain science for the crowd is a rich and the expanding body of information.  My intention here is to apply these concepts to problems, situations and opportunities from business and tech, and explore the implications. That’s novel.  I find it fascinating.  Hope you agree.   – db

How Much Energy to Put Into LinkedIn?

September 19th, 2008

In my confession and apology for ignoring LinkedIn for over a year, I repeatedly alluded to an exchange of value.  This is an important concept in considering applications, social networks, even games.  The concept was drummed into me by some very smart management consulting partners, as we used it as a mechanism to improve the relationship between a product or brand, and a consumer.  This is why I was so hungry for a user-reported value proposition.

Face it, LinkedIn, Facebook, whatever, take time, effort and attention.  Like nature’s demand that matter and energy be conserved, any hopes of getting something out of LinkedIn requires you put effort in.

So how much time and attention should we put in?  Getting to an answer requires some value-based framework to evaluate the exchange.  This is to ask ‘What is the coin of the realm?,’ the realm being LinkedIn here.

My inner engineer is pleased with the time-utility model that my networked friend, Steve, illuminated in the last post.  Having one’s contacts maintain their contact data saves time.  You don’t have to do the upkeep, and chasing current information for a lost contact can cost loads of time.  I can write an equation for that:

Contentment happens when [Potential Time Lost to Maintenance and Data Recovery] >> [Time Invested in LinkedIn].

Of course, I don’t think this is why we do it – I just like it because it is elegant and probably sufficient if we ran our personal economics rationally.

More importantly, we humans invest in our social networks because that is a successful behavior for us.  We like being in groups, especially groups which we have been invited to join and accepted.  You may ascribe the behavior as having been taught, as in the Golden Rule, ‘Do unto others …’, or the Norm of Reciprocity.  Or you might have learned it from direct experience as a member of family, team, church, and so on.

I happen to think investing in social networds is encoded deeply in our DNA.  Why you ask?  Years ago I visited the Denver Museum of Nature and Science where in the center of the entrance hall stood the fossilized skeleton of a mastodon (or perhaps a mammoth – help me out here if any of you saw it), with a stone spear point embedded in its side.  The bone had grown around the spear point, so the animal survived the assault.  Standing next what was surely a massive animal, I trembled slightly to stand in the position that the man or woman who drove that spear stood, and to imagine the potential stomping of the spear’s former owner that might have followed knowing the animal lived to heal.  Until that moment, I did not know man and mastodon lived at the same place and time.  My DNA, however, somehow knew to tremble.  And I am sure the hunter who threw that spear valued a robust social network.  Think about it: he or she didn’t have to be faster than the mastodon, just faster than the slowest social network member present when the spear made it mad.

Fear I suspect plays a contemporary role too, as in ‘I have never used LinkedIn to get that next opportunity, project or job, but I might and I don’t want to miss out,’ or something like that.

We meter the energy spent on the likes of LinkedIn according to social norms.  I know it seems obvious as we refer to them as social networks after all, but few of us find time to ponder the obvious as we process the invitations in our inbox.   Still it makes sense to understand our behaviors, especially when we have technology that amplifies them.  Dan Ariely wrote a fascinating and enjoyable book, Predictably Irrational, that explores our irrational behavior and decisions, and the pattern nature of us that gives rise to being predictable.  He vividly describes the vast difference in value we assign to social transactions versus economic transactions.  This social value exchange is the ‘coin of the realm’ point I am raising for these social networks.  Read this brief but powerful excerpt to get a good sense of it.

With regard to LinkedIn, or Facebook or MySpace for that matter, a tradeoff between social and economic norms does not traditionally come to mind – at least not yet.  The relationship I have with my network members and my relationship with LinkedIn are completely different.  It is as if they exist in completely different, non-intersecting planes.  In fact, I am not sure I even have a relationship with LinkedIn.  I sent them a question recently, and to my knowledge they never replied.  No surprise here, because having a human-enabled relationship is costly, for customers and non-customers.  I am a not a customer for LinkedIn.

My network member and former colleague in Europe, Joost, points out LinkedIn’s valuation on a June, 2008, investment round just over $1 billion, and their then 23 million users (see CNET), and resulting market value per user at just over $43.

So you and I may be worth $43 or so to LinkedIn.  Not sure how I feel about that, for this post anyway.  How about you?  – db

Update:  Nice discussion on the law or norm of reciprocity in the context of Twitter by Kris Colvin on March 14, 2009.

Return to LinkedIn

September 19th, 2008

I left LinkedIn for a year or so.  I was weary.  Invitations to “Join my network on LinkedIn” rolled in … from good people.  In most cases, I asked the sender:  “What are you using it for?” and “Are you using it for business?”  And the response was uniform silence.  Often I repeated the question in person and received no response.

So I stopped responding.  To me, it felt like a bot was running against some address books on people’s PCs, and asking me to service it.

Don’t get me wrong, I inadvertently service bots all the time – we all do.  But I don’t want to put time, energy and attention into servicing bots.  Google’s indexing bots and the internet archive‘s bots are about right, in terms of my tolerance for exchanging anything with bots.

Recently I logged back into LinkedIn, my cynicism lasting only so long (the name of this thing is ‘crusty’ after all).  But this time I got real, energetic responses to the same questions.  That’s the real story.  People now seem to have reasons for investing their time, energy and attention into LinkedIn.  Great answers, in fact.

My favorite was from Steve, who said something like ‘It is my Rolodex. But different from my Rolodex, my LinkedIn people maintain their data for me.’ Those are not the words of the company, but of a user. That’s a strong value proposition, and I love it when a user can readily volunteer a value prop for an app.

I was also blown away by the chatter of many that had their own particular contemporary answers to the questions that produced only silence a year or so ago.  Answers ranged from techniques to gain meetings with potential clients in corporations, to getting the preferred end-around HR route to a new position, to recruiting more efficiently when filling a position, and to corresponding with former colleagues.

My apologies to those whose invitations languished while I was away.  I’m back.  – db