Dana Blankenhorn

Next Stage of the Cloud Boom

It’s cheaper for most businesses to rent a cloud than own one. But it’s even better to be one.

That’s why Apple, Microsoft, Amazon, Google, and Facebook are the five most valuable companies in America. Each is worth over $1 trillion. Each put the “ante” of $1 billion/quarter into cloud construction in the last decade. Each continues to pour $3-5 billion more of cash flow into their networks every 90 days.

Policymakers focus on the services these companies provide, but it’s the cloud that makes them powerful. Microsoft isn’t software. It’s cloud and software, which lets it take cash from competitors. Google isn’t services, it’s services and software, which also let it take cash from its competitors. Only Facebook, so far, is refusing to rent capacity, and even it sells access to what’s becoming a global fiber network.

That’s where we are today. Where will we be in 2025, if man is still alive?

Lessons of the Labor Shortage

There are three reasons for the current labor shortage. 

Two are signs of failure. One is a sign of success.

First, the failures.

The refusal of many employers, especially in the food service industry, to pay a living wage has long been a disgrace. They got away with it, in part, because America welcomed millions of immigrants, especially from Latin America. With the flow cut off, and other workers forced to fend for themselves for nearly a year, is it any wonder they won’t come back without more money?

This statement is controversial. I have friends who insist “people don’t want to work,” because they get more money not working. It’s not true, but my friends won’t budge. It might be because these friends are locked-in to their current positions, their current pay scale, their current lifestyle. I hate to say this of people I love, but there’s also some racism involved.

Why Tech Should Buy More Media

Ever since Microsoft tried, and failed, in cable news with MSNBC, tech has been leery of investing in media.

There have been exceptions. Jeff Bezos bought The Washington Post. Marc Benioff bought Time. But these were personal investments, not corporate. They were made for political reasons, not business ones.

The result is that the media remains run by conservatives, by junk men, and by useful idiots. Fox News has been joined by OAN and Newsmax. Local papers are being destroyed by hedge funds like Alden, who are more interested in the tax breaks than the product. CNN, MSNBC, and The New York Times  remain committed to “both siderism,” which allows the right to drive the agenda.

This is threatening the country, the economy and (most important) tech. Billionaires like the Smith family, which owns Sinclair, come from the resource industries. They see labor as fungible. They see the world in black-and-white. They don’t see change and they don’t want change.

Change is what tech thrives on. It’s what tech produces. Brains are the gating factor to technology growth and it’s clear that today’s conservatives hate brains. Otherwise, they would have endorsed the vaccine and wouldn’t have pushed Trump.

A half-century ago the right saw this kind of threat and acted. The myth of the “liberal media" is based on the idea that reporters were professionals, but it didn’t understand how Vietnam was a Cold War activity. It didn’t see the coming resource wars. Only the resource industries, the oil guys and lumber guys and real estate guys, saw that.

Living With Moore's Law: Past, Present and Future

This is actually the fourth edition of this book, which I have been writing and rewriting for 20 years now. 

Living With Moore's Law: Past, Present and Future is a collection of essays I have been working toward all my working life. It describes what Moore's Law is, how it developed, and how it extended into every area of computing through the 20th century.

Then it does more. I take the story into the present and explain just what we need to do, as a society, to take advantage of these miracles.

Then it does more. I have written an extra chapter about what comes next, the miracles that await us by harnessing the capabilities created by Moore's Law -- clouds, devices, and wireless networks. 

I consider it must reading for anyone interested in technology, in what it has done for us, what it's doing to us, and how we need to work with it to save the planet. 

Also, it's just $2.99. Free if you get it through Kindle Unlimited, Amazon's $10/month lending library. 

Cheap as chips.

Previous versions were offered as The Blankenhorn Effect in 2002, as Moore's Law: Better and Better, Faster and Faster in 2010, and as Technology's Big Bang: Yesterday, Today and Tomorrow with Moore's Law, in 2019. 

The Cold War in Cyberspace

Computing is a binary process. (Image from an album cover by Trippie Red.)

I knew this when I first came online in 1985. Back then all the modems made noise, all the screens were glass, and all the networks were owned by the phone monopolies.

It was obvious, when I was reporting on the Electronic Networking Association in the late 1980s. Computing made freedom binary. Either you were free, or you weren’t. Netiquette was never more than a suggestion. That’s why the Internet didn’t open to general traffic until 1993. The military had to give up control over its tool.

Since then, we’ve done a lot to model the analog world in the digital one. But the binary nature of networking remains. We’re either free or we’re not free.

Law has acted against this like calculus against a curve, or codecs against sound. Greater or lesser effort is applied against different levels of violation. But computing remains binary. Those who are committed to ignoring the law still have the advantage.

In the analog world, it’s true that the good guys must protect every door and window while the bad guys only need to jimmy open one. But in the digital world, jimmying open one means all the doors and windows are open to anyone who has the tool.  Software now costs nothing to distribute, and networks can’t tell the difference between software that’s stealing your money and software that’s helping you buy an iPad.

Virtual Staging

Right now, production for films, TV, video games, and Web sales are all done differently.

Five years from now, they will all be done in the same way, using “virtual stages” and virtual reality software.

As with everything else in tech, it’s starting at the top of the cost curve but will head down rapidly. Tools like the Unreal Engine cover the software side. Virtual stages represent the hardware side.

The cost of this gear is very high. But the gear is just the tip of the cost iceberg. You need people who can run it, you need people who can write code around it. You need people to integrate it, people who can tell stories using it, and you need big bandwidth to distribute it.

The New Hybrid Cloud

You get a cloud. And you get a cloud. Everybody gets a cloud.

Well, most people.

Several years ago, the idea of the “hybrid cloud” died. The idea that companies should keep their data centers while moving “customer facing” applications only to the public cloud didn’t make economic sense. Cloud applications ran so much cheaper than systems designed for mainframes or internal networks.

It wasn’t just about hardware. It was also about software. Proprietary software couldn’t compete with open source. Linux won. Even Microsoft admitted it. Tech companies acted rationally, by extracting the equivalent of “monopoly rents” from their data center offerings, which hastened the move to public cloud.

Now things may be about to reverse. That’s because, as companies and organizations have gone “all-in” on cloud, they’re finding themselves with huge bills. If Google or Microsoft or Amazon is the “one throat you can choke,” they’re the ones choking you.

Pay for the Clouds

Right now, the roughly $150 billion/year going into cloud infrastructure is paid for with cash flow. Most of that cash flow comes from free services.

It’s ad-supported services that are holding up the free Internet. It’s these ad-supported services that the clouds were first built to support.

The antitrust bills now zipping along in Congress try to end all the perceived “sins” of the Cloud Czars – Apple, Microsoft, Amazon, Google and Facebook. But they don’t answer the big question, which is where new cloud investment will come from if the Czars are broken up.

Amazon can do fine on its own. There is plenty of cash flow coming into Amazon Web Services to support its capital spending. Most of Amazon’s investment these days, in fact, is going into warehouses and transport fleets, which aren’t as profitable. Splitting AWS from Amazon, along with its digital services like Amazon Prime video, the Kindle eBooks, and Alexa cloud-based speaker, would be a stupendous opportunity for investors. It would let AWS grab share from Google and Microsoft because their clouds are tied to software that competes with their customers.

Cloud Czar Conundrum

In 2021, governments around the world hate the Cloud Czars.

They don’t like seeing companies both build infrastructure and rent it out to competitors. They don’t want Amazon to compete with Netflix or Walmart. They don’t want Microsoft hosting Salesforce, then building its own suite. They don’t like Google doing search while it rents its cloud. They don’t like the Apple app store. They blame Facebook for Trump.

It’s not just here. China is doing all the things Americans just pretend to want, taking down Alibaba, Tencent and Baidu with new regulations and demands. Of course, the same people who want Facebook destroyed pretend that China is going after Alibaba because “it’s communist” and Jack Ma a threat to the regime. (As if Mark Zuckerberg isn’t?)

Here’s the problem. Clouds are expensive. The price started a decade ago at $1 billion/quarter. Now it’s about $5 billion/quarter. That money isn’t borrowed. It all comes from cash flow. The game was said to be too rich for AT&T, too rich for IBM, too rich for HP and Verizon.

SPACs Deliver Fortunes Without Results

I’ve been noodling on the SPAC problem for months now, wondering what’s wrong with them. Only recently has the answer come to me.

Special Purpose Acquisition Companies (SPACs) are designed to take private companies public before they’re ready for the public market. That is, the SPAC buys what’s basically a venture company, then sells stock in the venture to the public.

SPACs don’t have profits or even sales to justify their valuations. What they have is the sponsor’s word, and the CEO’s presentation. These are carefully stage-managed, as though public investors were buying into a venture fund. Of course, small investors can’t buy into venture funds. We’re not accredited. We can’t guarantee that if the venture goes bust, we won’t be hurt. That’s what being accredited means.