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Your guide to the future of enterprise computing, every Monday and Thursday.
December 30, 2020
Welcome to Protocol Cloud, your comprehensive roundup of everything you need to know about the week in cloud and enterprise software. This week: what to expect from the cloud in 2021, some of Protocol's best stories from this incredible year, and the worst Five Questions segment we've yet to publish.
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The Big Story
If I knew the way …
2020 should have been the year that ended year-end prediction pieces. After all, the most significant event in a century, one that would reshape nearly every aspect of life in these United States over the past 12 months, failed to appear on virtually every 2020 prediction scorecard published in December 2019.
Still, we look to find a reason to believe. And a reason not to work too hard during the holiday break. So in that spirit, here's our best guess at what lies in store for cloud and enterprise computing in 2021.
Consolidation is the obvious trend for the coming year.
- Salesforce's $27 billion purchase of Slack was probably the biggest non-pandemic story of the year in this part of the world, and with good cause. Slack enjoys great mindshare among the movers and shakers in tech but less so among the average business user, and profits remain elusive. At the same time, Salesforce is just one of several massive enterprise software companies with deep pockets in search of growth.
- There are lots of well-known but barely profitable public enterprise software companies that could be the next Slack: Box, New Relic, Dropbox and Domo all have single-digit billion market caps, according to the closely watched BVP Emerging Cloud Index, and established customer bases.
- And there are lots of cloud companies with inflated market caps thanks to the surge in investor interest in anything cloud-adjacent during 2020. Bankers and lawyers specializing in mergers and acquisitions are going to have a great 2021.
One thing that won't change all that much in 2021 is the pecking order of the cloud providers.
- AWS has dominated this market since 2006 and there's no sign that its most serious challengers — Microsoft and Google — will do anything to dent its lead in 2021.
- In a lot of ways, this discussion doesn't really matter. There is still a ton of cloud business on the table as the late majority of enterprise companies realize they need at least some sort of cloud strategy, especially after what they witnessed this year.
- That means everyone can continue to grow without having to take share from their rivals. And now that AWS is on board with the multicloud era, the most likely scenario is that large enterprise companies engage with multiple cloud vendors over the next year or so.
- At some point, this situation will change as the overall market starts to slow. We're nowhere near that point, although cloud sales and marketing representatives will continue to talk trash about their rivals for the foreseeable future.
Now, for the wild cards:
- Oracle's Larry Ellison will retire, or at least step back from day-to-day involvement at the company he founded during the Jimmy Carter administration, to enjoy the warm afternoon breezes of Lanai.
- Google will join AWS, and, reportedly, Microsoft, in developing or purchasing Arm server chips for its customers.
- There will be drama in the open-source software community.
- The fallout from the supply chain hacks of 2020 will force companies to move much more slowly with the adoption of new enterprise software, which will be a boon for the big platform companies with huge security budgets and a problem for enterprise startups.
- AWS re:Invent 2021 will be the first in-person event on the enterprise tech schedule since February's RSA Conference, and we'll all be happy to be in Vegas in early December. Maybe.
And here's one prediction I feel very comfortable making: It is going to be a very interesting year for Protocol and enterprise tech coverage. See you in 2021.
The lockdowns this year have transformed our homes into offices, schools, concert halls, movie theaters and gyms. Our homes are working harder for us, but so is our technology. The device that is working the hardest is perhaps the TV—becoming our lifeline to a far more virtual world.
This Week On Protocol
Taking stock: Regular readers of this newsletter won't be surprised to hear that cloud stocks were some of the biggest winners during 2020, as this analysis from Protocol's Shakeel Hashim showed. The bigger question will be how cloud stocks and companies fare if the world returns to something approaching normal in 2021.
Living at work: Most people in tech were fortunate enough this year to be able to work from home during stay-at-home orders around the country, a privilege amid a raging pandemic. But remote work brought new challenges, especially considering the political upheaval this year, as Protocol's Anna Kramer reported.
Going long: Settle in for the rest of what is hopefully an extended holiday break with Protocol's best longreads of the year, which includes my profile of Google Cloud's Kelsey Hightower. But also check out the deep dives into Discord and cloud gaming, two trends that appear ready to hit their stride in 2021.
Five Questions For...
Tom Krazit, senior reporter, Protocol
Wait, why do you get to answer the questions this week?
Eh, it's the holidays.
Pick one piece of consumer or business software (that isn't sold by your company) that you can't live without.
When I used to travel, it was Google Maps. This year, it was the PlayStation 4.
What was the first computer that made you realize the power of computing and connectivity?
The Palm Treo 700. I bought it a year or so before the iPhone was released, and it was the first computer I owned that previewed how mobile access to the internet would change the world.
What was the biggest reason for the success of cloud computing over the past decade?
Cloud computing offered founders, developers and operations engineers a dizzying array of possibilities to take the lessons learned from trying to scale the first decade of the internet on their own and create technology infrastructure that was far more performant, resilient and affordable. At the same time, software-as-a-service companies were able to create work software people actually wanted to use, compared to crappy internal applications or prohibitively expensive software packages from megacorporations, which were also crappy.
What will be the biggest challenge for cloud computing over the coming decade?
Reducing complexity, across everything from setting up cloud infrastructure to billing. And improving the diversity of an industry with the cultural homogeneity of a Connecticut squash tournament.
Around the Cloud
- Qualtrics filed to go public once again, just two years after it was acquired by SAP on the eve of an IPO. The customer experience software vendor expects to raise at least $12 billion.
- VMware sued former executive Rajiv Ramaswami for breach of contract, claiming he "failed to honor his fiduciary and contractual obligations to VMware" while preparing to become CEO of Nutanix. (Disclosure: My wife works for VMware.)
- Intel's bad year got worse this week after it received a letter from activist investor Third Point demanding major changes, including spinning off its manufacturing division.
- The groups behind the SolarWinds supply chain attack tried to get access to cloud resources through backdoors placed in on-premises servers, according to new analysis released by Microsoft.
- Microsoft's close relationship with resellers has been one of its greatest strengths while retooling its business around cloud computing. But the SolarWinds attack was able to exploit one of those resellers to steal emails from a customer using its email software, according to The Washington Post.
- Wired's list of novel cybersecurity incidents from this year brought back some memories. Remember that huge Twitter breach?
- Advances in networking technology generally move slower than those in other parts of the IT infrastructure, but more telecom companies will embrace cloud services in 2021 as the tech stabilizes and the payoff becomes too large to ignore.
Thanks for reading. Happy new year!