Comment by chatmasta | Hacker News Reader

Comment by chatmasta | Hacker News Reader

Great post. I completely agree, and was making this same argument to someone yesterday. There are a few important trends and facts:

- Containerization allows more tenants-per-server than virtualization

- The entire business model of cloud computing is maximizing tenants-per-server

- Because containerization has a direct cost benefit to cloud providers, they will adopt it quickly

- Quick adoption of containerization will trigger a "new wave" similar to when Linux gained mass adoption

- Cloud companies are scrambling to invest in hot containerization rather than build their own

- Docker has developer street cred and a solid team

- Post-dotcom, post-web2.0, companies invest in open source software now. This is new.

- Cloud companies compete with each other

- Different cloud companies invested in Docker, CoreOS

- Docker, CoreOS are competing

My logic is a bit fragmented, but all the necessary facts are there, and the conclusion that logically follows from them is that it makes rational business sense for CoreOS to diverge from Docker. There's billions of dollars at stake in the latest "platform war" (previous wars include desktop, server, mobile) -- the battle for the cloud. Containerization directly reduces costs and the "metric that matters" for cloud hosts, tenants-per-server. Therefore any open source company with a good containerization solution is going to attract a lot of investment. But bigcorp A does not want to rely on strategic direction of bigcorp B. Therefore they diverge their open source offerings.

It makes sense from a business perspective, and it's kind of sad from an open source perspective, but also good if you believe in free market economics. The question is, how much do free market economics apply in open source?

Containerization directly reduces costs and the "metric that matters" for cloud hosts, tenants-per-server.

the flip side of this coin is that it reduces the cost for every cloud provider. In essence containers moves the locus of competition further up the stack, commoditising the layers below. I'll bet there were a lot of people who were upset when shipping containers were standardised too.

I'll bet there were a lot of people who were upset when shipping containers were standardised too.

There's a GREAT book on the subject:

"The Box: How the Shipping Container Made the World Smaller and the World Economy Bigger"

http://www.amazon.com/Box-Shipping-Container-Smaller-Economy...

This is a fantastic book. I reviewed it last year: https://www.petekeen.net/book-review-the-box

What I found most interesting was how long it took to come to agreements on "standard" sizes. Lots of infighting and politics.

>The question is, how much do free market economics apply in open source?

This is something I ask myself a lot (as someone focused 100% on open source at a company whose core business is not open source support).

For all the hype that open source has enjoyed as a business model, it is much smaller/untested/too early to tell compared to the proprietary model. The most financially successful open source company to date is Red Hat, which, at 10B USD+, is a great success by anyone's measure. But that's the best any open source pure play company has done. If you look in the other direction, Oracle is worth 180B USD, and even a fledgling BI company like Tableau is in the high single digit billion.

As much as I'd like open source companies to be an Oracle-grade blockbuster success, the brief story is not exactly promising.

As well as Red Hat has done, they are dwarfed by many other companies. This post about open source compressing the market size by 10x made a lot of sense, and was also a little depressing. http://kellblog.com/2014/11/18/it-aint-easy-making-money-in-...

But isn't that exactly how innovation and disruption works? Taking a market and saying "we'll do it for 10x less".

It depends what kind of innovation. Disruption often involves business or marketing innovation combined with technical non-innovation. Shrinking a market by 10x can be a good way to ensure that there won't be enough profit left to invest in R&D.

I guess it's a question of what the company is selling. Google for example uses huge stacks of open source to run their business. And even though they are far from being pure open source, they do contribute back to the community in multiple ways, for example with contributions to the Linux kernel and open source projects like Chromium and Go. And then there are projects like Qt, that mix open source tools with enterprise support.

But I think that the field of IT is still extremely young and that in the future larger companies will discover that collaborating on open source platform and infrastructure projects will give them much better synergy effects and lower IT costs by removing the license cost and at the same time lowering the support cost. Compared to history, the 20-30 years that mainstream computing has is really just a spark and there is so much change coming that will be directed by market and competition.

re: your Google example, that's why I said open source "pure play". Of course, we wouldn't be where we are without all open source projects that sprang up in the last few decades.

And yea, it's too soon to tell. Software & software business are evolving rapidly under our feet. I am curious to see what will happen next.

I think that's the wrong comparison, because companies like Redhat are pretty much by design forcing down margins in the spaces they are operating in by lowering the bar to compete. E.g. to compete with Redhat, you can start by learning their products and offering consultancy services on them, and then gradually forking each one of them to offer specialised products; but conversely so can everyone else.

We should not expect to see open source companies get to Oracle sized valuations; instead we should expect to see them chip away at the market share of companies based around proprietary software until said companies margins shrink, and either their valuations shrinks with them or they expand into new areas in time to delay it.

But ultimately we should expect larger and larger parts of the software space to be commodified and margins driven down for core features like this.

I consider Twitter to be an open-source company. The amount of open-source work they sponsor and incubate surpasses that of most traditional vendors.

Their business model is also a lot better. They have a nice unrelated service they make money off of instead of trying to charge for enterprise support or licenses.

conversely, look at companies like facebook, google, and walmart who have all made the decision to open source their code. software and non software companies alike recognize that contributing their work to the world adds value to their own product.

i think in the future you will have more non technology first companies, like walmart, with strong software divisions promoting and funding open source software. they dont need to make money directly off selling the software when they can make money off what the software does.

I think valuation is the wrong thing to measure here. Open source companies do not seek to maximise value capture. The surplus created through open source by its nature are spread throughout the user base and ecosystem. Perhaps Red Hat has produced 100B+ of value but only is valued at 10B or whatever because that is the part they have been able to capture effectively with their business model.

> - The entire business model of cloud computing is maximizing tenants-per-server

this is not exactly true. the business model is to maximize the revenue per server, not the number of tenants. this can be done in a number of ways.

Good point. Of course, one of those ways is by charging the same price-per-tenant but increasing the number of tenants-per-server. If multiple companies do this, we should expect the price-per-tenant floor to decrease.

I liken containers to adding an extra row of seats on a commercial aircraft.

Right now the airline (host) operates one aircraft (server) and can fit X number of seats on it (split due to both consumption but also overhead from the seat's depth (hypervisor overhead)). If containers have lower overhead than hypervisors then it would be akin to an airline buying thinner seats and getting an extra row in.

However it does remain to be seen how much more efficient containers are over hypervisors, and also how secure they are (there are lot's of unanswered questions on the security front).

I don't think most people are comparing containers to hypervisors (VMs); they're comparing using just VMs to using containers on top of VMs. Especially, they're comparing running one-VM-from-some-IaaS per workload, to running several of those workloads (possibly from multiple tenants) on top of the same VM-from-some-IaaS.

If it wasn't insane to run a hypervisor within a hypervisor, this platform war would have started years ago, with Heroku taking AWS VMs and splitting them into tiny Heroku VMs.

My understanding of Amazon's new container service is that it lets users spawn a bunch of instances that the service manages (job scheduling and so on). This is not maximizing tenants per server nor maximizing revenue per server, IMO, as it mainly lets users increase the workload per instance. Without the container service, unless they run the similar infrastructure themselves, users would have to run additional instances to have the same isolation and ease of deployment (if they use Puppet, Chef, Ansible, or whatnot instead of some Docker cluster management software).

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