Author: Barb Darrow

Dell’s board acknowledged Monday morning that it received two more buyout bids and vowed to consider them in the best interest of shareholders. As has been reported over the past week or so, The Blackstone Group and Carl Icahn prepped their own bids to counter a $24.4 billion (or $13.65 per share) offer put together by company founder and CEO Michael Dell and Silver Lake Partners to take the company private.

Icahn, who owns what is thought to be about 6 percent of Dell shares,  is offering up to $15 per share for a $2 billion piece of the company. the Blackstone-led group is offering $14.25 per share. All Things Digital has more here.

Both Icahn and Blackstone offers are for a controlling stake in the company, not the whole thing. They would leave some shares to trade publicly.

The gist of Dell’s statement linked here is:

“The Special Committee, consisting of four independent and disinterested directors, has determined, after consultation with its independent financial and legal advisors, that both proposals could reasonably be expected to result in superior proposals, as defined under the terms of the existing merger agreement. Therefore, each of the Blackstone and Icahn groups is an “excluded party” and the Special Committee intends to continue negotiations with both.”

Michael Dell founded the company nearly 30 years ago and built it into what was at one point the world’s biggest PC maker and a huge power in servers as well. He stepped down as CEO in 2004 but  re-assumed that role three years later.

The company’s problem is that, like rival Hewlett-Packard, it missed the boat in tablets and smartphones at a time when those devices started to outsell laptop and desktop PCs. Over the past few years, though the company has added a lot of software, storage and cloud computing expertise via acquisitions of companies like Quest Software, Boomi, EqualLogic and Compellent. It also bought more services expertise by acquiring Perot Systems.

Michael Dell himself owns an estimated 16 percent of the company.

The bidding war signals that at least two parties see the Dell offer undervaluing the company.  Whether the rival buyers would keep the company intact or sell off the piece parts down the road remains an open question.

The Wall Street Journal blog outlines several scenarios that could play out.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The state of cross-platform media measurement
• A near-term outlook for big data
• CES 2012: a recap and analysis

Mirantis, a startup which has made a name for itself by mixing and matching the best OpenStack components from multiple vendors into cloud solutions for customers, is now making its own library of configuration and deployment tools available to the masses, under the Apache 2.0 license.

“We are releasing the secret sauce — the automation library — that we used to set up some of the largest OpenStack adopters — Paypal, Webex, The Gap and others,” Mirantis CEO Adrian Lionel said in an interview.

According to Mirantis VP Boris Renski, the big automated payment provider has massive infrastructure of about 15,000 physical nodes and another 65,000 or so physical nodes for parent company Ebay.

“They have a very large VMware vSphere footprint but, at this, point they want to go beyond just vSphere virtualization and implement orchestration – [they want] agile, cloud infrastructure to accelerate their time-to-production cycle on new apps and website features and they want to standardize across the board,” Renski said.

PayPal, like other companies in the same boat, can go in one of two directions, he said. It can invest more in VMware and standardize on it — by buying vCloud Director — or it can go the open-source, open-standards route.

“With the project we are involved in, they are making giant strides towards the latter. The work is not 100 percent done and there is still a chance that it won’t succeed. They have several thousand instances running on OpenStack and several production workloads today. The plan is to go to 10K physical nodes by summer time.”

If everything continues to track well, he said, they’ll roll OpenStack across all of Paypal and possibly eBay infrastructure and do away with VMware, he said.

Paypal itself was more circumspect on its plans. Asked about its OpenStack plans, Saran Mandair, senior director of platform engineering and operations, said via email that the company is committed to collaborating with the open-source community to drive innovation:

“It is working with Mirantis to leverage OpenStack to help transform our global infrastructure into an agile and open cloud platform … Our OpenStack project uses the Fuel library by Mirantis, which has dramatically accelerated our OpenStack deployment with robust, production-grade architecture while giving us the flexibility to tailor OpenStack to our needs.”

But a spokeswoman, unsurprisingly, said the company will continue to use VMware as well.

VMware, which is actually now a member of the OpenStack Foundation, will, of course, also continue to plug the vSphere- and-vCloud-Director tandem to companies with existing workloads. And, earlier this month, it also said it will host its own public cloud infrastructure, which is also based on its existing vSphere code.  The company said it is committed to customer choice.

Most onlookers, however, still see VMware vCloud Director as a closed and expensive ecosystem that OpenStack itself was set up to depose.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The fourth quarter of 2012 in cloud
• The promise of SDNs in the enterprise
• Cloud computing infrastructure: 2012 and beyond

Hold the phone! Amazon Web Services is launching a mobile applications initiative. According to a company job post, AWS seeks a software development engineer for a new iOS/Android AWS initiative to be based in Palo Alto, Calif.

The ideal candidate will have built a “top 25 app;” and want to build a “brand new service from the ground floor,” according to the job post.

It continued:

“In this role, you will be responsible for creating and owning world-class production tablet and web client applications across major platforms including iOS and Android . You must be willing to insist on the highest standards for quality, maintainability, and performance. You will ensure that engineering best practices are followed and that software is designed to be responsive, reliable and maintainable.”

TechCrunch first reported the news Sunday night.

Developers typically access AWS from their PCs but smartphones and tablets are quickly supplanting laptops and PCs as devices of choice for more workers so it would make sense for AWS to turn more attention to those form factors.  And, the company added Android and iOS(s appl) support to the AWS management console so users can keep an eye on their services from their device of choice.

While this posting talks about client app development rather than SDK, it is also possible that AWS will devise its own mobile backend as a service (MbaaS) — something that GigaOM Pro analyst Janakiram MSV posited in a post (subscription required) a few weeks ago. According to MSV:

“AWS has all the required building blocks to expose mobile backend services. Amazon EC2, Amazon S3, Amazon DynamoDB, and Amazon RDS already form the backbone of many mobile applications today. The AWS SDK for Android and iOS makes it easy for developers to consume these services.”

General purpose platforms as a service (PaaSes) neglected this mobile segment — a gap that startups like Kinvey, Parse, Stackmob, and Kii rushed to fill. Now, PaaS players are adding more mobile capabilities — witness Microsoft’s addition of mobile services to Windows Azure last summer.

I will update this story if and when Amazon responds to requests for comment.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• What Amazon’s new Kindle line means for Apple, Netflix and online media
• How tomorrow’s mobile-centric data centers will look
• Analyzing the wearable computing market

As a couple of private equity firms sorted out their bids for Dell last week a couple of names bubbled to the top of the list of prospective new (that is non-Michael Dell) CEOs.

Blackstone, a PE firs interested in bidding against  Silver Lake Partners and Michael Dell for the company, reportedly reached out to Mark Hurd, co-president of Oracle and former CEO of Hewlett-Packard, Dell’s nemesis. Hurd is charged, in part,  with making Oracle’s hardware business as margin rich as its software business, and so far that effort has been underwhelming. Financier Carl Icahn is also pursuing Dell, according to published reports.

Some have also mentioned Michael Capellas, the former CEO of Compaq who helped engineer its sale to HP for $25 billion in 2001. Then-HP CEO Carly Fiorina drove that deal. Capellas was more recently involved with The VCE Co.  created by EMC and VMware.

But seriously people, if we’re going to play guessing games, let’s really play. Hurd and Capellas? Puh-leaze. Why not Louis Gerstner? Gerstner, who is credited with turning IBM around during his tenure there,  has “got one more in him,” according to one of my  panel of experts on Twitter.

Or how about Todd Bradley, HP’s PC guy who was passed over as CEO at least once and perhaps twice. What better way to strut his stuff than to reinvent HP’s biggest PC-and-server rival?

Or Dave Donatelli? The HP storage-and-servers guy  is clearly not afraid to jump ship. His departure from EMC for rival HP in 2009 sparked a lawsuit.

As EVP and GM of HP’s Enterprise Group, Donatelli is responsible for “the development and delivery of server, storage, networking and technology services solutions.” That pretty much sounds like Dell’s mission statement — except for the enterprise part. As Dell’s president of software told me a week ago, Dell is more focused on SMBs than the largest enterprises, where IBM reigns.

And heck, if former HP CEOs carry a premium (why that might be is a mystery to some), why not Fiorina herself?

Others think Gerry Smith, who heads up Lenovo’s U.S. operations, would be an interesting pick. Or Carol Bartz, former CEO of Autodesk and then Yahoo.

Or, Y.K. Kim, CEO of  Samsung Electronics America. Now there’s a company that knows from success.

Intel’s outgoing CEO Paul Otellini could be looking for work.

But, since Dell is fashioning itself as a sort of IBM for the small and medium business (SMB) set, it really needs more Software-as-a-Service (SaaS) expertise. Maybe they should hire someone from Saleforce.com or Box?

One of my Twitter experts put it this way: ”The market for SMB is pure SaaS plus cloud and only enterprises, [service providers], and government [accounts] will be buying hardware,” he noted.

If the new bids from Blackstone and activist Carl Icahn gel , Dell’s board has a few more days to sort through them and make its decision. Dealbook has a good explanation  of the process as it will unfold now.

Of course, this new CEO discussion, as entertaining as it is,  may be moot if the Michael Dell and Silver Lake Partners buyout bid wins the day. If that’s the case, presumably Mr. Dell will remain CEO if he so desires.  If not, let the games begin again.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• New challenges for the IT organization
• Infrastructure Q2: Big data and PaaS gain more momentum
• In Q3, Big Data Meant Big Dollars

Amazon reportedly to build CIA secret cloud

Probably the biggest news of  the week was a Federal Computer Week report that public cloud leader Amazon is building a private cloud for the CIA. Citing unnamed sources, the story put the worth of the contract at about $600 for 10 years. What was unclear — since no one is speaking officially — is if this completely separate from Amazon’s existing Govcloud, although that appears to be the thinking.

As the exec of one cloud competitor put it — this shows that Amazon will, for the right price, get into the private cloud business.

CIA spokespeople would not comment; Amazon did not respond to request for comment. Asked last week at GigaOM’s Structure Data event about the report, CIA CIO Ira “Gus” Hunt said he could not comment now but “maybe someday.”

A bad week for cloud-based services

The week started off rough for many Google Drive users who reported ttheir service was down, As Engadget put it, if there’s ever a time you don’t want your shared documents to go inoperable it’s Monday morning. There were additional intermittent troubles with the cloud storage system for two days.

On Wednesday, it was LinkedIn’s turn to flake out. The professional social networking site was down for about 45 minutes over a two-hour period, according to InfoWorld.

Not to be an apologist for cloud services — God knows I was ticked off with problems with Google Drive last week –but it helps to remember how many times on-premises applications go awry.

My last employer ran an email system from a huge vendor. And we had multiple multi-day outages every year. I’m sure the vendor (it’s in the great northwest and is now trying to forklift its users to cloud ) would probably blame the implementation, the on site admin guys would beg to differ. Bottom line however was that the poor schmuck end-users couldn’t get their mail. Moral of the story? Technology can fall down no matter how it’s delivered.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The evolution of consumer-media cloud storage
• A near-term outlook for big data
• The new IT manager, part 1

Dell may have more than one serious suitor come Monday. After weeks of rumblings, the Blackstone Group and investor activist Carl Icahn are preparing their own rival bids to the Michael-Dell-and-Silver-Lake-Partner $24.4 billion buyout offer, according to reports on Saturday.

Dell sweepstakes gets more interesting

Bloomberg News, which has been on top of this story from the get go, now reports that the Blackstone Group made a tentative offer for Dell late Friday. The Wall Street Journal subsequently posted that activist investor Carl Icahn, who has a 6 percent stake in the PC-and-server maker,  is likewise preparing a bid. Both Blackstone and Icahn have been reportedly in the hunt for weeks. Icahn and others have said the $24.4 billion Silver Lake offer significantly undervalues Dell’s worth.

None of the reports named their sources and none of the companies offered comment.

Dell’s private equity back story

Dell management has connections to both Blackstone and Silver Lake. Dave Johnson, who Dell poached from IBM in 2009 to head up its acquisitions strategy left Dell for Blackstone in January of this year. John Swainson, now president of Dell’s software group, consulted with Silver Lake  Partners.

As one former Dell exec said via email: “So there you have John Swainson, previously Silver Lake and currently at Dell and Dave Johnson previously at Dell, and currently at Blackstone.  Add Marius Haas previously KKR and now at Dell, and you have a pretty interesting PE clique there.” Haas is VP of Dell’s Enterprise Solutions group.

According to the Journal’s sources, the entry of new bidders will extend Dell’s “go shop” period for another four days.

Adding more intrigue to the mix, Fortune reported last week that Blackstone Group might tap Mark Hurd, Oracle co-president, to lead Dell. That raised eyebrows. Hurd left Hewlett-Packard, where he was chairman and CEO, under a cloud of accusations about sexual harassment and misuse of company expense accounts.

HP rival Oracle then hired Hurd, presumably for his hardware expertise and possibly because Oracle CEO Larry Ellison wanted to taunt HP chairman Ray Lane, a former Oracle president. So far, the hardware turnaround Hurd has promised for Oracle has not materialized. That Dell, which competed tooth-and-nail with HP for PC and server market leadership, might be run by a former HP guy would be ironic.

It’s also not at all clear whether ownership by a private equity firm will right Dell’s course. It’s missed a lot of opportunity by being late or ineffectual in the mobile device and tablet market — areas where HP has also missed the mark.

Mark Hurd? Seriously?

Hurd is often mentioned as a successor to Ellison at Oracle. But the tech world is littered with former successors to Ellison who are now elsewhere. Just ask Charles Phillips or Tom Siebel or Gary Bloom or Marc Benioff. Or Ray Lane. It’s by no means a certainty that Hurd will be any more successful and he may be looking for an out. Especially since, as one Wall Street analyst put it, Oracle’s promised hardware turnaround has failed to materialize.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A near-term outlook for big data
• The promise of SDNs in the enterprise
• The state of cross-platform media measurement

Massachusetts education authorities have their eyes trained on Twitter this week, searching for signs of students who are cheating on the state-wide MCAS exams.

According to the Boston Globe Friday: staffers “scour” for MCAS hashtags during the tests. The practice kicked off last June during the science tests. Out of 76,000 students, 10 were caught tweeting and their tests were spiked.

So according to the news kids are cheating on MCAS using #MCAS and talking about it there. How stupid could you be?—
Ross Perry (@Ross368) March 22, 2013

The Massachusetts Comprehensive Assessment System tests are the bane of existence for students from elementary through high school.  All students in public schools — or private schools that take state aid — must take the standardized tests on english, math and science.

A spokesman for the state department of elementary and secondary education told the Globe: “Twitter … is something we need to be aware of.”

You might think that if you or your friends are breaking the rules, you might not want to take to social media and blab about it. But you would be wrong. In the Steubenville, Ohio rape case, the perpetrators were caught (and later convicted) in part based on information that was shared by their buddies on Twitter, Facebook and other social outlets.

For what it’s worth, a quick scan of #MCAS on Twitter mostly turned up students talking about the Globe story or complaining about the tests. So this lesson may have been learned.

Feature photo courtesy of Flickr user Ivy Dawned

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Examining the rise of crowd labor platforms in 2012
• Social third-quarter 2012: analysis and outlook
• Listening platforms: finding the value in social media data

With Hadoop and HDFS and related big data technologies, we’ve pretty much licked the scale problem of handling petabyte upon petabyte of data. Next up: solving the speed problem.

Right now running interactive queries across data sets spread among a thousand nodes is no mean feat. As a rule of thumb, you can run fast queries on old data (in a data warehouse) but running fast, interactive queries on massive distributed data sets is still the problem, according to speakers at a Structure:Data 2013 session today that honed in on what problems real-time data analytics — when possible — could attack.

“Interactive analytics is a complex problem. You have on one end a business users asking ‘what if we did things a little different?’” said Silvius Rus, director of big data platforms for Quantcast. They may have 10 ideas on how to change something and 9 are bad, but one is good. They need to be to iterate queries and get the answer back in minutes not a day, he added.

On day one of the show, Paul Maritz, the head of the new EMC-VMware Pivotal Initiative, talked about how companies need to have faster, more nimble feedback loops from their massive data stores. Telephone companies know they have dropped calls but they don’t know who’s call they dropped, and it can take days or even weeks to find out.

That’s the sort of problem that this new world of fast, big data analytics can solve. In that world, the phone company “at the very least, could text you an apology,” he noted.

Panel moderator Michael Driscoll, CEO of Metamarkets, really wanted to hear about what this “big data utopia” — where the system could ingest, transform and spit out answers to questions in real time — could mean. The applications that could start coming out within months could be impressive,  according to Ashok Srivastava,  chief data scientist for Verizon. There are the obvious things like real-time or near-real-time response to customer problems (see the dropped call issue above) and requests but he also foresees breakthroughs in cybersecurity. He cited earlier talks at Structure:Data about how systems can increasingly understand the motion and movement of people around the globe and the movements of concepts through society.

And he thinks real-time big data capabilities will play out in citizen science research. “Imagine taking your cell phone pictures and combining them with multiple millions of other cell phone pictures. That’s something that can be used by scientists,” he noted.

In health and medicine, the ability to query the most up-to-date personal health data along with historical data might enable real-time predictions about a person’s health or the status of machine health, he added.

Check out the rest of our Structure:Data 2013 live coverage here, and a video embed of the session follows below:

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Controversy, courtrooms and the cloud in Q1
• Q4 Wrap-up: SOPA and the future of digital content
• Social 2013: The enterprise strikes back

Oracle execs including CEO Larry Ellison attributed the company’s third-quarter earnings miss to a lackluster sales effort that let big deals slip into the fourth quarter, but others see more ominous signs.

For the period ending February 28, Oracle reported earnings of 65 cents per share on revenue of $9 billion, just short of the 66 cents on $9.4 billion in revenue that analysts had expected. Oracle co-president Safra Catz said sales were likely hurt by the prospect of government spending cuts. “It didn’t help that our quarter ended on the same day as the sequester deadline,” she noted on the company’s earnings call Wednesday night. But, overall, Oracle’s sales people took the fall. “What we really saw is the lack of urgency we sometimes see in the salesforce as Q3 deals fall into Q4,” Catz said.

Skeptics maintain that Oracle faces something much more critical than an unmotivated sales force. Rather, they say it, and other legacy IT players must confront a fundamental shift in how companies buy enterprise IT and a shift in the database mix to more NoSQL products and a similar transition to distributed data stores.  Oracle’s bread-and-butter product remains its relational database, which leads the market and is entrenched in financial services, healthcare and many government and academic accounts. But that dominance is under fire as more companies see the need to add non-relational database capabilities to the mix.

Many enterprise and government accounts are sick of paying huge fees for yearly software and hardware upgrades in an era where they can easily move at least non-mission critical workloads to Amazon Web Services or some other cloud vendor.

Oracle won’t be the only company affected —  Microsoft, Cisco, EMC, HP, and other legacy IT vendors — will continue to face tough times as these transitions play out.

Sunil Dhaliwal, founder of VC firm Amplify Partners, concur that this is a massive “multiyear” transformation that will shake legacy IT providers to their core as more workloads go to Software as a Service offerings which negate the need for massive in-house server upgrades. That, and the solid acceptance of open source software is still something the legacy players have yet to deal with, although most of them have made huge acquisitions to bolster their SaaS and open source stories. (Oracle bought RightNow and others as a response to Salesforce.com and Workday, and its acquisition of Sun Microsystems got it into the MySQL and Java business.)

The thinking is that more enterprise players are buying compute, storage, networking and software like they “buy” electricity. while the traditional players see this change coming, it’s unclear if they will be able to adapt fast enough beat lower-cost, younger and more nimble players that were built for this new market.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The fourth quarter of 2012 in cloud
• Big data 2013: key trends and companies to watch
• Cloud computing 2013: how to navigate without a map

A lot of the talk around big data analytics focuses on the sheer amount of data, the speed of inputs and the glitzy visualizations that can result from analysis. But if you focus on all those bells and whistles before really thinking through the problems you need to solve, you’re putting the cart before the horse, according to two business users of the technology.

“It’s about putting the business question first. In marketing, where my experience is, it’s clear if you’re driving program success by leveraging vast volumes of data, having the correct problem and … then having an answer that can show why you did what you did,” Mohan Namboodiri, VP of customer analytics at Williams-Sonoma, told attendees of GigaOM’s Structure Data event in New York.

John Sothan,  VP of finance for BuildDirect, agreed. “The way to turn data into insight is to squash the notion that big data is a silver bullet. We preach that data and analytics is important but then we empower people to be curious and ask questions and get involved in big data analytics.

“We need to teach users to cut into the data and be curious — that helps validate the data and without that people have a hard time trusting it,” Sothan added.

Both speakers said analytics help optimize their supply chain and better target their marketing, with the hopeful end result being more business going to existing customers and attracting new customers.

Ensuring that people are involved in the data and analytics process has been a recurring theme at Structure Data, with speaker after speaker talking about the need to incorporate human expertise into the whole process.

Check out the rest of our Structure:Data 2013 live coverage here, and a video embed of the session follows below:

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The importance of putting the U and I in visualization
• Don’t hold your breath for a single big data stack
• Big data budgets on the rise

Those who hoped that Oracle would break its streak by posting server revenue gains last quarter, have to keep on hoping.

Revenue for Oracle’s “exa boxes” fell again, 23 percent year over year to $671 million from $869 million. Revenue on hardware systems support was  also down — 6 percent — from the year ago quarter.

As GigaOM has reported, Oracle has yet to hit on a winning formula for its highly engineered boxes although the company and its proponents maintain that the company makes good profit on each box it sells. It’s just that the revenue it makes on these high end boxes does not make up for revenue it had made on lower end “commodity” servers in the past.

On the earnings call Wednesday night, Oracle chairman Larry Ellison said the company plans to launch its next SPARC-based servers next week.

Said Ellison:

“Our new T5 servers have up to eight processors, and are more than twice as fast as the T4 systems that they replace. Even more important is our new M5 server, which has up to 32 processors and runs its Oracle Database over 10 times faster than the similarly priced old M9000 server it replaces. With the delivery of the M5 server next week, Oracle will finish upgrading every server in the SPARC product line dating from the time we acquired Sun.

He also said that Oracle’s delivery of lower-end boxes last year dinged average selling price.

“… we announced some lower-end Exadata systems, in our engineered space, and new customers have been beginning with the smaller systems, now that they’re available, eighth rack rather than quarter racks. And that’s somewhat lowered our ASP…” Ellison said.

Seeking Alpha has the full earnings call transcript.

Oracle’s server revenue was off 18 percent year over year in the previous quarter.

Overall, Oracle results came in below consensus expectations on license revenue and earnings per share, according to Nomura Securities analyst Rick Sherlund. “After robust 17% reported license and subscription revenues growth in Q2, this was down 2% y/y in Q3 (or down about 6% organic, constant currency), below the Street’s growth estimate of 8% y/y,” Sherlund wrote in a research note, adding: “The long anticipated hardware turnaround remains elusive.”

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A near-term outlook for big data
• Report: How Mobile Cloud Computing Will Change Tech
• Report: The Future of Data Center Storage

Much has been done to bring big data closer to the people who need it. The advent of public cloud infrastructure has decimated the cost of collecting, maintaining and processing vast amounts of data. The next frontier is making that data reproducible, said Matt Wood, principal data scientist for Amazon Web Services, at GigaOM’s Structure:Data 2013 event Wednesday.

In short, it’s great to get a result from your number crunching, but if the result is different next time out, there’s a problem. No self-respecting scientist would think of submitting the findings for a trial or experiment unless she is able to show that the it will be the same after multiple runs.

“Much of today’s statistical modeling and predictive analytics is beautiful but unique. It’s impossible to repeat, it’s snowflake data science.” Wood told attendees in New York. “Reproducibility becomes a key arrow in the quiver of the data scientist.”

The next frontier is making sure that people can reproduce, reuse and remix their data which provides a “tremendous amount of value,” Wood noted.

For more on Wood, check out this Derrick Harris post.

And check out the rest of our Structure:Data 2013 coverage here, and a video embed of the session follows below:

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• AWS Storage Gateway jolts cloud-storage ecosystem
• It’s time for cloud security and big data to come together
• 9 Companies that Pushed the Infrastructure Discussion in 2010

When the internet of things comes to fruition, the economics of big data analytics will start to pay off, Gaurav Dhillon, founder and CEO of SnapLogic. It will be a world in which sensored devices will grow far beyond the NEST thermostats and Fitbit devices some of us now have.

The foundation of the current  data warehouse business was the simple bar code, used to replenish inventory. Data warehouses are now a $30 billion business. Imagine when there’s input from all these other devices and machines. That’s where the numbers of big data start to ring true, Dhillon said at GigaOM’s Structure Data conference on Wednesday.

There are already apps that will ping a retailer if it notices a shopper wandering aimlessly around a superstore that will send a sales associate to help her find what she’s looking for. “That could be quite useful,” Dhillon said.

Big data in industrial applications is still not being tapped to its full potential, he noted.

There are huge industrial boilers that incorporate a sensor that watches their temperature, he said. “These things cost hundreds of millions of dollars and this sensor looks at the temperature in the infrared spectrum and today just provides a cable feed back to some guy in a baseball cap who watches it. It’s 2013, why couldn’t we put analytics into it that will tell us it will blow in a w eek because we see these hotspots.”

The same sort of technologies could be applied to aircraft engines, cars and other machinery.

Applying the right analytics to the right data, and also ensuring that machine learning data can interoperate with higher level data from CRM or other applications, is where the real payoff of big data begins, said Dhillon, who is an authority on the niceties of data integration. He is former CEO of Informatica.

Check out the rest of our Structure:Data 2013 coverage here, and a video embed of the session follows below:

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A near-term outlook for big data
• What’s driving the next phase of the e-commerce evolution
• GigaOM Research highs and lows from CES 2013

Basho has done pretty well positioning its Riak CS distributed storage technology  in the open source cloud world. It’s not really part of either the OpenStack nor the CloudStack organizations but it will run in both environments. This was a tad unusual because, strictly speaking, Riak CS itself was not open source.

At least until now. As of Wednesday, Riak CS will be available under the Apache 2 license.

This is part of an evolution, said Basho CTO Justin Sheehy (pictured above.) Last fall, Basho said it would work with Citrix to integrate Apache Cloudstack effort to integrate Riak CS into Cloudstack.

“We are not part of the OpenStack Foundation but we have deployed Riak CS in OpenStack environments with OpenStack components,” Sheehy said. OpenStack also includes its own storage subsystem as an option.  The work with Cloudstack is a little more explicit since Cloudstack is mostly a compute cloud with networking elements but does not itself offer a real storage subsystem analogous to Amazon’s S3 storage, he said.

One of Riak CS’s key draws is that customers can use it to build private or public cloud storage that is API-compatible with Amazon S3, the 800-lb gorilla in public cloud storage.

Along with its licensing news, Basho also unveiled new features for the open source version including multipart uploads to ease the movement of very large files in pieces into the store; per-bucket policies to restrict access to some data based on its source IP; and Riak Control, a standalone web administration tool for managing users (see screenshot below.)

Basho continues to offer Riak CS Enterprise as a commercial product with around-the-clock support.  To be clear, Basho’s Riak, the distributed database underlying Riak CS was already an open source product.

Sheehy will be talking big data and other hot topics at GigaOM’s Structure: Data event in New York on Wednesday.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A near-term outlook for big data
• Dissecting the data: 5 issues for our digital future
• What Amazon’s new Kindle line means for Apple, Netflix and online media

Now here’s a story that will probably never get confirmed:  Federal Computer Week is reporting that the Central Intelligence Agency has contracted cloud kingpin Amazon Web Services to build a cloud for the super secret spy agency.

The report, as you might expect, doesn’t name its sources, but contends that Amazon will help build private cloud infrastructure that will enable the CIA to “keep up with emerging technologies like big data in a cost-effective manner not possible under the CIA’s previous cloud efforts.” The contract is for up to $600 million over the next 10 years, according to FCW, which said neither Amazon nor the CIA would comment.

A CIA spokesman, as expected, declined comment saying: “As a general rule, the CIA does not publicly disclose details of our contracts, the identities of our contractors, the contract values, or the scope of work.”

Here’s the thing though. A collaboration like this makes sense for the CIA, given the U.S. government’s big “cloud first” initiative, which holds that the use of cloud computing technologies will save money and make government more responsive and flexible to its constituencies. And it would give Amazon a test bed to show — at least within the tight-lipped intelligence community — that it can build mission-critical and super secure private clouds for their use.

Amazon, as well as some legacy IT players,  has struggled on that whole private cloud front. Amazon Web Services launched Virtual Private Cloud capabilities four years ago and last week said it is broadening their use. It also hosts GovCloud, which is cordoned off from the rest of AWS, for government accounts.

For what it’s worth, Amazon’s biggest and oldest data center farm, US-East, is in Ashburn, Virg., and it is reportedly expanding its presence there with another huge data center farm. The CIA is based about 20 miles away in Langley, Virg.

I will update this story if I hear back from Amazon and this is something we’ll be sure to ask  Ira “Gus” Hunt,  CTO of the Central Intelligence Agency, when he speaks Wednesday at GigaOM’s Structure Data event in New York. I’m betting he keeps mum.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Beyond the data center: transitioning government to the cloud
• Amazon makes public cloud more attractive to the enterprise
• Metered IT: the path to utility computing

Buying your way into more social media analytics capabilities is all the rage.  Oracle bought Vitrue last year and then Eloqua for $871 million; Salesforce.com dropped $689 million on Buddy Media. And now Microsoft is buying Netbreeze, a Swiss company that it says will beef up its CRM play. This, just five months after Microsoft acquired MarketingPilot, a marketing automation specialist. Terms of those deals were not disclosed.

From the blog post by Microsoft corporate VP Bob Stutz outlining the deal:

“[Netbreeze]… combines modern methods from Natural Language Processing (NLP), data mining and semantic text analysis to support 28 different writing systems including German, English, French, Spanish, Russian, Arabic, Japanese, Traditional Chinese or Mandarin.  This is a huge benefit over competing solutions that translate to a common language then analyze sentiment from there.  Additionally, they offer their customers the ability to monitor a wide array of social channels including Facebook, YouTubeand Twitter, as well as 6,000 online news websites, 18 million blogs and 500,000 message boards.”

Netbreeze combines this native language analytics with data mining and transactional and text analysis capabilities, Microsoft said in a statement announcing the deal. It plans to provide that data via its Dynamics CRM software, so customers’ marketing, sales and service teams will have more information at — if you’re pardon the cliche — their fingertips.

InterArbor Solutions principal and GigaOM PRO analyst Dana Gardner says vendors need to help their business customers better grok what’s being said about them online and react quickly. And that takes significant technological prowess given the sheer amount of Tweets, Facebook likes and the like floating around out there.

“The true picture or critical information about a business’s actual performance can’t be had without including social media data. But to make that social data into good, clean — and, therefore, actionable — data means you have to capture it at scale and integrate it swiftly, to make it something your systems can digest to analyze it. And so we’re seeing a rush to build, buy or partner to gain the means to do just that,” Gardner said via email.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• A near-term outlook for big data
• 12 tech leaders’ resolutions for 2012
• NewNet Q4: Platform mania and social commerce shakeout

The Massachusetts Institute of Technology will release documents related to the case against activist Aaron Swartz but it will edit out names and other information, according to a letter from MIT president Rafael Reif to the MIT community. That will probably not be enough to satisfy Swartz’s legal team and other supporters who blame MIT and overzealous prosecutors for Swartz’s death.

Late last week, lawyers for Swartz, the 26-year old programmer and civic activist who killed himself in January, requested that these documents be released to the public.

Swartz’s father Robert Swartz, his partner Taren Stinebrickner-Kauffman and his lawyers maintain that Swartz was railroaded by both MIT and the U.S. Attorney’s office, which prosecuted him on criminal charges for downloading too many articles from JSTOR, a database of academic articles.

In the letter, Reif said MIT remains committed to openness but needs to protect the privacy of individuals mentioned in the documents and the security of the school’s networks. He acknowledged that Swartz’s lawyers expressly requested that no names be excluded or redacted. But, he wrote:

“In the time since Aaron Swartz’s suicide, we have seen a pattern of harassment and personal threats. In this volatile atmosphere, I have the responsibility to protect the privacy and safety of those members of our community who have become involved in this matter in the course of doing their jobs for MIT, and to ensure a safe environment for all of us who call MIT home.”

(The full text of the letter is also available on pastebin.)

A few weeks after Swartz’s death, MIT named  Hal Abelson,  a professor emeritus of computer science, to head up an inquiry into the school’s role in this matter, but at a memorial service for Swartz last week at MIT’s Media Lab, Stinbrickner-Kauffman expressed skepticism about the process, saying she feared a PR whitewash.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• The Internet of Things: What It Is, Why It Matters
• GigaOM Research highs and lows from CES 2013
• How HR can make the case for workforce analytics

Sift Science, the startup forged by a gaggle of former Googlers, is ready for its close up. As of Tuesday, the company is opening up the testing of its fraud-detection service for e-commerce and other sites to the public and has $5.5 million in funding from some heavy-hitter investors to back its play.

The San Francisco company, which we covered in October, claims it can scope out more fraudsters before they do harm because it is not constrained by the finite number of rules that most vendors use to flag suspicious activity. “Many anti-fraud technologies follow a set number, maybe 175 to 225 rules, against which to measure user behavior —  the problem is fraudsters don’t follow the rules and change all the time,” Sift Science co-founder Brandon Ballinger said in a recent interview.

“We take a machine learning approach to learn from patterns early as they form to predict whether a new user is fraudulent,” he said. Sift Science’s machine learning algorithm has automatically learned one million patterns that predict fraud, and as more sites join the network, it will learn more patterns to help everybody fight fraud more accurately, he said.

Speeding up fraud defense

“You might expect the worst type of users to sign onto a site and make an immediate purchase [with a stolen credit card] but in reality if they wait an hour or so they’re more likely to be a fraudster than a fast buyer,” Ballinger said. “Or, if you’re an auction site and a seller posts an item where the text is all in caps, the user is four times more likely to be a fraudster — they’re not posting real items, it’s usually some sort of money laundering scheme, they’ll have 100 stolen credit cares and create a seller account and a bunch of buyer accounts then they post fake items and buy them.”

But the bad guys are always going to change things up to avoid detection. An example,  in the past, the most popular time to conduct online fraud was at 3 a.m. local time but now it’s midnight to 1 a.m., Ballinger said. And, while a large percentage of traffic coming out of Nigeria remains fraudulent, a whopping 81 percent of fraud comes from U.S.-based IP addresses. “That means either they’re in the U.S. or are smart enough to use a proxy,” Ballinger said.

Applying webscale data and analytics to fraud detection

That fluidity and flexibility is important as is the company’s Google DNA. Ballinger said 8 of the company’s 9 employees are engineers and 5 are ex-Google engineers. “We’re taking the Google approach of large-scale machine learning,” he said. Except Sift Science is running on Hadoop, Hbase and MapReduce on Amazon’s public cloud.

It is thus able to use Amazon Web Services huge scale –and the network effect of all the companies on it — to build its knowledge base. “If someone attacks AirBNB and Affirm we can apply that knowledge and use it elsewhere,” Ballinger said.

Sift Science, which relies on what Ballinger calls a dead-simple REST API,  will face off against in the fraud detection space including Silver Tail Systems, which EMC bought last year and which watches and tracks user navigation trends; and Threatmetrix which watches device IDs.

Early customers include payment processors, online retailers, and some name brands including Airbnb and Affirm, Max Levchin’s latest startup.

The $5.5 million in funding comes from some big names including Union Square Ventures; Max Levchin of PayPal, Slide and Affirm fame; Marc Benioff of Salesforce.com; Kevin Scott of AdMob, Google and LinkedIn; Alexis Ohanian (Reddit and YCombinator); and Rich Barton (Zillow and.)

Prospective customers can sign up on Sift Science’s site for the service, which is free of charge for their first 5,000 users, the service is free; after that it’s 10 cents per user.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• 12 tech leaders’ resolutions for 2012
• 9 Companies that Pushed the Infrastructure Discussion in 2010
• Microsoft Azure: What It Is, What It Costs and Who Should Care

VMware, at last, comes clean about its AWS killer

Remember last July when our own Om Malik and Stacey Higginbotham reported on VMware’s plan to take on Amazon with a cloud of its own?  Remember VMware denying it?  Well, last Wednesday it all became official with the announcement of VMware Hybrid Cloud services — in which VMware will host its own public cloud that will be sold by existing VMware partners.

Gartner’s Chris Wolf has an interesting take on his blog here.

Now, there is some wiggle room for VMware here. Our original story showed the big cloud coming out of the then-unannounced spin-off of VMware and EMC That spinoff — the Pivotal Initiative — did happen, but it appears that it’s VMware, not Pivotal, that’s running the big cloud. Paul Maritz the former CEO of VMware and now the head of Pivotal, will be speaking this week at GigaOM’s Structure: Data in New York.

Amazon adds beefs up Virtual Private Cloud

It was an even more busy week than normal for Amazon itself which unveiled new Virtual Private Cloud capabilities for AWS users. Launched 4 years ago Amazon VPC lets users create “a virtual network of logically isolated EC2 instances and an optional VPN connection to your own data center,” according to the AWS blog. what’s new now is that soon, when a new customer launches EC2 instances, they will do so in the ”EC2-VPC” platform.

“You don’t need to create a VPC beforehand – simply launch EC2 instances or provision Elastic Load Balancers, RDS databases, or ElastiCache clusters like you would in EC2-Classic and we’ll create a VPC for you at no extra charge.  We’ll launch your resources into that VPC and assign each EC2 instance a public IP address.”

At that point you can assign multiple IP addresses to a single instance, change security group membership on the fly, and add egress filters to those groups.

One of Amazon’s weak points when it comes to the enterprise accounts it wants to attract is the unwillingness of IT pros — especially in heavily regulated businesses — to put mission critical workloads on shared public cloud infrastructure. This new VPC capability might make them more amenable to using AWS at a time when more and more “private” cloud options — from competitors Rackspace, HP, and others are coming on line. GCN has more on VPC.

Also new his week: AWS tripled the amount of storage that can be associated with each RDB (Relational Database) instance.

“You can now create DB instances (MySQL or Oracle) with up to 3 TB of storage (the previous limit was 1 TB) and 30,000 IOPS (previously, 10,000). SQL Server DB Instances can be created with up to 1TB of storage and 10,000 IOPS.”

And, Amazon also launched a version of its mobile AWS console for iPhone so It types can see what’s going on with their Amazon cloud when they’re not at their desks. An Android version of the console debuted in January.

this public cloud war will only get more interesting if, as has been reported here and elsewhere, that IBM is in the market for SoftLayer and/or Rackspace.  If IBM ends up making either of those rather substantial purchase — Reuters put a $2 billion price tag on SoftLayer and Rackspace would be much more — it would only show how critical IBM sees this market that it would spend that kind of dough after already investing billions in its own cloud infrastructure.

Working with your Frenemy: Newvem debuts AWS heat map

Newvem is the energizer bunny of AWS watchers. Amazon keeps “totally copying” Newvem’s capabilities (in the words of Newvem CEO Zev Laderman) and Newvem just keeps on adding more capabilities.

Newvem, the Israeli company obsessed with showing you more about your Amazon Web Services use than you know, was at it again this week, unveiling its Cloud Utilization Heat map that shows AWS users their utilization over multiple regions by time, machine type and availability zone.

The sales pitch?A substantive portion (15 percent) of the clouds Newvem analyzes now are underutilized. That means “$30 million of $200 million EC2 spending tracked is wasted,” says Newvem spokesman Cameron Peron. Presumably if you know what resources are being wasted you can make moves to streamline operations and run things optimally. Sell off reserved instances you’re not using, for example.

Here’s my guess: Newvem has focused 100 percent on AWS to this point. But as Amazon keeps adding more of its own dashboard and monitoring alerts, I would bet Newvem, like other monitoring companies, will soon turn its eye to other clouds as well. After all, multi-cloud deployments are one tactic large companies are looking at to avoid locking into a single provider.

That Amazon competes with its own partners is certainly not new. It’s been going on for years as we’ve reported. The company, like Microsoft or IBM before it, treads a fine line between relying on smaller, nimbler partners to come up with innovative new services, and then adding more value-added services itself. Amazon launched a partner program last year to help navigate this terrain.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Takeaways from the second quarter in cloud and data
• Microsoft Azure: What It Is, What It Costs and Who Should Care
• Metered IT: the path to utility computing

When word surfaced Thursday that EMC and IBM were kicking the tires of SoftLayer as a potential acquisition target, there were plenty of raised eyebrows. Now sources close to the matter say that EMC is not really in this hunt at all; but IBM may well be.

Reuters broke the news of a potential SoftLayer acquisition the day after EMC protege VMware announced plans for its Amazon Web Services competitor that would, in theory, give EMC a horse in that race without having to buy anything. So when a source close to the matter says EMC is not party to this competition, I’m inclined to believe it.

IBM, on the other hand, is (or at least was) very interested in SoftLayer, according to one former IBM exec who spoke on the condition of anonymity. This source, however, said as of a month or so ago, IBM was also looking at Rackspace, which is an OpenStack player and is thus more closely aligned to IBM’s OpenStack strategy than SoftLayer, which is not an OpenStack member. IBM joined the OpenStack Foundation a year ago and announced its first OpenStack-based products last week.

That IBM insider said IBM has lots of cash but struggles when it tries to develop products internally.

“Realizing this, IBM’s become a holding company of sorts, buying assets, integrating them and reselling them as an IBM brand,” said this source, who remains close to IBM. That growth-by-acquisition pattern may well continue in cloud.

“IBM does not want to fund its own development because past history shows we’re not very good at it. The internal OpenStack work may suffer from that tendency so there was an effort underway to just buy an OpenStack company,” he said. When prompted, he confirmed that Rackspace was on the short list of the OpenStack companies under consideration.

SoftLayer and EMC declined comment on this story. IBM and Rackspace officials said they do not comment on rumors.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Takeaways from the second quarter in cloud and data
• Big Data 2011 Preview
• The fourth quarter of 2012 in cloud