investment in cloud

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I was just interviewed by a business journalist for a story on the rapid growth of data centres. In my opinion he was missing the point.

It is not about investment in data centres but about density of compute power and the software running on it. The last batch of servers we purchased for and Central Data Systems are a quantum more powerful than the previous generation only 2 year ago. A typical machine has 256 GB – 512 GB of RAM and 36 – 48 CPU cores within just 2 rack units (9 cm). We shrank 5 racks of servers and filled only part of one of these machines. We also set up 100 TB of storage in 4 rack units.  We will expand to over 1 petabyte of storage and with very high IOPS (input/output operations which are critical to service high performance systems).

Whilst some are investing to build data centres I believe they are missing the mark. It is those who control the compute cloud who really hold the market opportunity. This is all about the technology, both the Intellectual Property and knowhow.  It is not about investing in airconditioned rooms and selling a square metre of floor space any longer.

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The moment after something new is invented and people see it, its obvious to everyone and seems as though it was always there.

I met a very intelligent eBusiness entrepreneur on Friday who had not heard of the concept of a virtual PC desktop or cloud computing before.  He told me, with some consideration, that it might start to catch on in about 2-3 years time.   Gartner Research predict the virtual PC desktop industry will be worth $65billion in 3 years time representing 40% of the professional desktop market.

I’m now pitching for our next investment round in (early expansion stage).    When I raised our first external investment round in 2007 the concept of a virtual PC desktop was, for most of the savvy investors I pitched too, completely intangible.  We raised the round it but it was a lot harder than I expected.  I’ve since seen many Web2.0 pitches in Silicon Valley and I understand how investors find these businesses so unquantifiable and risky.

It frustrates me when people think of as a vague, emerging, intangible technology.   So our new pitch now is based on hard physical demonstrable facts.    It leads with a case example from one of our enterprise customers this year who reduced a $600,000 IT upgrade to a mere $30,000 representing 95% cost saving. is a physical infrastructure replacement.  It’s tangible, the customers are real and they are saving a fortune.    There’s also an adjunct business opportunity for’s Channel Partners.  In this case example, the implementation and migration project for our partner netted them $70,000 revenue in the first 6 months.  From now on anything that customer does will involve and the channel partner.   So its extremely tangible and the funding raised from this next round is to drive growth through sales.

We are now making extensive use of video to make complex concepts visual.  And we use live case studies to show how physically real it is.  It’s a simple subscription revenue model that replaces a business IT infrastructure for 1/10th of the cost, 1/10th of the logistics and 1/10th of the support ongoing.   In the case of, the Cloud Platforms and AppStores draw market share away from Microsoft and hardware.   It’s a physical business that we’ve managed to virtualize.

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