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Introduction to CloudComputing

Business & Technology

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Objectives of the Class

1. An introduction to the business of software, past presentand future

2. Silicon Valley view

3. Not meant to be a detailed technology class

4. Focus will largely be on business applications vs.

consumer applications; although the boundaries arebeginning to blur.

5. At the end you should have a good working knowledge ofthe essential parts of a next generation software business

1. Prepare you for a job

2. Or maybe youll start the next Google

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Lectures

1. Seven Business Models2. Application Cloud Services

3. Co-location Cloud Services

4. Computer and Storage Cloud Services

5. R&D - Platform Cloud Services

6. Operations- Platform Cloud Services

7. Marketing

8. Sales

9. Finance & Operations

10. People, Organization, Management

3

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Cloud Services Stack

Network

Cloud Services

Data Center

Cloud Services

Compute & Storage

Cloud Services

Platform

Cloud Services

Application

Cloud Services

http://www.taleo.com/

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Lecture 1

Business Models

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StanfordCS309A

Opening Day

September 22, 2009

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SW

Support

$4000/user(one time)

1Traditional

$800/user/year

Model One

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2000 2001 2002 2003 2004 Change Change

New Software 4,315 4,584 3,441 3,270 3,541 (774) -18%

Product Support 2,978 3,571 3,836 3,929 4,529 1,551 52%

Product Revenue 7,293 8,155 7,277 7,199 8,070 777 11%

Consulting 2,293 2,257 1,982 1,761 1,589 (704) -31%Advanced ProductServices 132 137 96 257 258 126 95%

Education 411 411 317 258 239 (172) -42%

Other Services 2,836 2,805 2,395 2,276 2,086 (750) -26%

Total Revenue 10,129 10,960 9,672 9,475 10,156 27 0%

Operating Income 3,080 3,777 3,570 3,439 3,864 784 25%

Operating Margin 30% 34% 37% 36% 38% 8% 25%

Oracles Financials

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Oracles Financials: Most Recent Quarter

New Software revenues of $1.028B declined 17% Year over Year

Product Support revenue of $3.117B increased 6% Year over Year

Product Support was 62% of overall revenue

Annualized Product Support Revenue is now $12B+, larger than the wholecompany 5 years ago

And its all in the bag for next year.

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Support Service is Information

Source: Oracles 2003 Analyst Day

99,900,000 requests

Per yearfor known information

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SW

Support

$4000/user(one time)

1Traditional

$800/user/year

$0/user

2Open Source

$1600/user/year

RedHat

Model Two

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SW

Support

Management

$4000/user(one time)

1Traditional

$800/user/year

$0/user

2Open Source

$1600/user/year

RedHat

3Outsourcing

$4000/user(one time)

$800/user/year

Bid

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Erich Clementi, IBM Cloud Computing

3 November 2009

Big Blue on Tuesday announced that it

has named Erich Clementi generalmanager of enterprise initiatives.Clementi, who will report directly to IBMCEO Sam Palmisano, will be responsiblefor organizing the companys efforts in

cloud computing..

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SW

Support

Management

$4000/user(one time)

1Traditional

$800/user/year

$0/user

2Open Source

$1600/user/year

RedHatMySQL

4Hybrid

$4000/user(one time)

$800/user/year

$150/user/month

ORCLBlackbaud..

@H @C

3Outsourcing

$4000/user(one time)

$800/user/year

Bid

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Standardization, Repetition, Automation

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Model Four: Blackbaud OnDemand

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Concur (CNQR)

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Concur (CNQR)

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SW

Support

Management

$4000/user(one time)

1

Traditional

$800/user/year

$0/user

2Open Source

$1600/user/year

RedHatMySQL

5Hybrid+

$300/user/month

Callidus

@H @C

4Hybrid

$4000/user(one time)

$800/user/year

$150/user/month

ORCLBlackbaud..

@H @C

3Outsourcing

$4000/user(one time)

$800/user/year

Bid

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SW

Support

Management

$4000/user(one time)

1

Traditional

$800/user/year

$0/user

2Open Source

$1600/user/year

RedHatMySQL

6SaaS

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Mar 1999

Jun 2004

Jan 2002

Oct 2005

June 2005

Sep 2004

2002 2003 2004 2005 20062001 2007

Oct 2007

Dec 2007

Nov 2007

Aug 2004

Dec 2005

June 2006

Dec 2005

Model Six: Elite Eleven

http://www.taleo.com/

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Bruce Chizen, former CEO Adobe

29 September 2009

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2002 2003 2004 2005 20062001 2007

Model Six: Elite Eleven

Lars Dalgaard,Founder, President, CEO20 October

Rick RudmanFounder, President, CEO27 October

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Application Cloud Service: Economics

34%Year 8 S&M

Most of $100M invested to build adistribution channel

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Application Cloud Service: Economics

53%Year 7 S&M

$60M invested to build a

distribution channel

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Cost of Sales & Marketing

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SW

Support

Management

$4000/user(one time)

1

Traditional

$800/user/year

$0/user

2

Open Source

$1600/user/year

RedHatMySQL

6

SaaS

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Model Seven

Vic Gundontra,VP Engineering Google10 November

Reid Hoffman

Founder, ChairmanLinkedIn13 October

Jeff Jordan

CEO, Opentable6 October