Will 12,000 Cloud Computing Deployments Lead to Profit?

The cloud isn't just a buzzword for Canonical. For the Ubuntu Linux vendor, the cloud is a technology that its users are actually deploying, and it's got the numbers to prove it. For Canonical, there may well be a silver lining in cloud computing that could finally lead the company to Linux profitability as it looks to convert users of the free product to a premium version.

The Ubuntu Enterprise Cloud (UEC) has been available since the Jaunty Jackalope release in April 2009. UEC is now poised to be included for the first time in next week's Long Term Support (LTS) release with Lucid, which could further improve Ubuntu's cloud position.

"We're now tracking 12,000 active deployments of UEC and we're adding 200 every single day," Canonical COO Matt Asay told InternetNews.com. "These are active installations. These aren't people who downloaded it once and kicked the tires for a few days then dropped it."

Canonical isn't working directly with each of those UEC deployments, though it is working with some. Canonical launched commercial support services for UEC in July 2009.

Asay said that UEC users have been waiting for the LTS release, which will provide a longer support period than a standard Ubuntu release. Ubuntu LTS releases come out every two years and provide five years of support on Ubuntu Server. In contrast, regular Ubuntu releases come out every six months and provide 18 months of support.

"I think we're at the inflection point where a lot of the interest in Ubuntu is about to become paid interest where people are rolling this out into production," Asay said.

As to how Canonical is measuring its UEC usage, there is a mechanism that it uses to provide numbers.

"Within the UEC product there is something called the image store, which is where people go to get images to deploy on the platform," Canonical Marketing Manager Gerry Carr told InternetNews.com. It allows us to track new and unique visitors to the image store. So without deploying the product fully you can't access the image store."

Carr added that Canonical is not tracking UEC users by knowing exactly who they are or how big their deployments might be, though it is involved in a number of commercial relationships with customers on UEC.

"Where we're feeling confident about the size of deployments is with our commercial engagements where we know they are significant deployments, as they are significant proofs of concept with significant companies," Carr said.

The conversion of non-paying to paying users is often a difficult ratio to report for any open source effort, and Ubuntu is no exception. Asay noted that Canonical plans to get more aggressive at tracking its free-to-paid ratio on Ubuntu Linux and its related services and technologies.

"We can provide support for cloud deployments but we haven't actively been doing that," Asay said. "Our strategy for cloud moving forward is to offer support but also adding in other support offerings like management and monitoring tools."

"Going forward I suspect our conversion ratio for cloud deployments will be higher than whatever is today -- and today we don't have that data," Asay said. "What we get paid for in the cloud will in some ways be easier for us than the server, as there is a clear distinction between the free bits and the services we are charging for."

He added that Canonical has a relatively new sales director who is now pushing ahead on charging for support on the server side.

"For the first five years of the company's life, it wasn't set up to make money," Asay said. "The company was set up to make a fantastic Linux distribution and other tools around it and get it out there and get people using it. That was the focus."

That's now changing at Canonical as the emphasis is now shifting to generating revenues.

"We've achieved a significant amount of traction within an important constituency -- that is the developers and system administrators of the world," Asay said. "As we build tools that appeal to them I think they will pay us money."

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.

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This article was originally published on Apr 23, 2010
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