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Canonical’s growth play: Make customers’ and partners’ lives easier (and more economical)

TBR perspective

At Canonical’s 2018 Analyst Day, CEO Mark Shuttleworth laid out a very compelling construct for Canonical’s vision of being the link between the operating system (OS) layer and the cloud control planes. Canonical has Ubuntu OS versions to run from the largest high-performance computers with NVIDIA graphics processing units to the smallest device OSes at the heart of offers from niche vendors such as Rigado. Throughout the event, Canonical stressed multicloud interoperability through Kubernetes. The big unknown on the horizon is how to provision infrastructure for edge analytics, which sits at the heart of the strategic relationship Canonical has with Google Cloud as Google donates Borg to ensure Kubernetes does not challenge Borg the way Hadoop forked from MapReduce.

Existing virtualization economics has stalled, with premium pricing models emerging from the major and better-established competitors Red Hat (NYSE: RHT) and VMware (NYSE: VMW). The Canonical play further compresses the economics of the infrastructure abstraction and OS components, where parts will be provided for free and the services and update provisions will become the basis for the monetization model. Akin to how free Android disaggregated the device OS space and gained share against Microsoft, Canonical bets on market projections showing devices used/owned per person growing from two to three devices today to as many as 20 devices within the next five years.

It is from this vantage point that one open-source Linux distro, Canonical’s Ubuntu, was taking direct competitive aim at another (Red Hat), while likewise suggesting VMware’s time as the market maker would quickly start to fade as more and more app modernization efforts move code from virtual machines (VMs) into lightweight Kubernetes containers (clusters).

 

Canonical hosted its 2018 Analyst Day in New York City on Sept. 20, 2018. The event featured presentations from the top leadership at Canonical, including Shuttleworth, Finance Director Seb Butter, SVP of Global Data Centre Sales Jeff Lattomus, and VP of Global Sales, IoT & Devices Tom Canning. Canonical focused on business and go-to-market updates as well as key presentations by partners, such as Paul Nash from Google Cloud, outlining how Canonical has accelerated or added value to their businesses. At this year’s event, there was a noticeable blurring of the lines between cloud and IoT discussions in comparison to years past where there were more definitive tracks. Regarding both Canonical’s own strategy and its conversations with customers, it is exceedingly difficult to have a discussion about one and not the other, which is reflected in the broader IT landscape as of late.

Canonical seeks to solve the IoT software puzzle

Despite Internet of Things (IoT) having become a common term in business transformation vernacular over the last three years, its development is still akin to a self-guided home improvement project — you can find all the pieces at the store, but there are numerous brands per item and no guarantee the pieces will fit together; and you can find an endless number of blueprints online, but you won’t be able to tell which one is best for your situation or which will have the most lasting appeal. To most customers, IoT is a puzzle.

Most vendors are trying to simplify IoT to drive customer understanding, and ultimately sales. Some have been more successful than others: Dell Technologies (NYSE: DVMT) in ICT, Amazon Web Services (AWS) in cloud infrastructure and Atos in services. Canonical seeks to solve the software problem, primarily related to increasing solution complexity and abundance, the absence of effective security, lack of interoperability, and inability to update at scale, as well as housekeeping challenges for developers, all of which TBR believes are the largest hurdles to assembling and maintaining an IoT solution.