The next multibillion-dollar tech market was quietly born this year, says A-list VC Peter Levine
If you had predicted in 2006 that this crazy new thing called Amazon Web Services would upend the $3 trillion enterprise computing industry and cause companies like IBM, Oracle, and Microsoft to shake in their boots, you would have been laughed out of town.
Even as late as 2010, two years after Netflix decided to go all in on AWS and not build its own data centers, the enterprise world was debating if cloud computing would ever be safe and reliable enough to use.
Today, AWS is on its way to being a $13 billion business. Oracle looked across the bow, saw a giant threat, and is building its own cloud as fast as it can. Microsoft revamped its entire company and chose its third CEO to go after the cloud. And Google, the internet search giant, has become an enterprise cloud provider, by many accounts the No. 3 in the market.
Along the way, startups like Airbnb, Spotify, Slack, and Snap have grown into big, valuable companies, and new multimillion cloud-serving markets like hyperconverged storage, software-defined networking, and containers have been born, too.
And it seems to many pundits that now that cloud computing is here, we've arrived at the end, and the cloud as we know it will be the way of the future for years, maybe decades, to come.
But tech doesn't work like that.
While cloud computing isn't going away, the first signs that it's becoming "yesterday's" technology are here, says venture capitalist Peter Levine, a partner at Andreessen Horowitz.
The next thing is called "edge computing," Levine tells us.
Data centers on wheels
In a nutshell, edge computing means that every artificially intelligent object will use vast amounts of processing power, the equivalent of hundreds or thousands of PCs. In other words, each device becomes its own mini data center.
"This is about very sophisticated end computing," Levine told Business Insider. "A self-driving car will have 200-plus CPUs. That's a data center on wheels."
YouTube/Gigaom It wouldn't be practical for each device to use the cloud that smartphones do. Today, phones send everything to the cloud to be processed, the data is stored in the cloud, and the results are returned to the device.
But a self-driving car would have too much data to shift to somewhere to be processed. And it will need the results immediately; it needs to know instantaneously when to break or speed up.
Now imagine millions of artificially intelligent devices — cars, drones, medical equipment, manufacturing robots.
"You will never have enough bandwidth and speed on the network between for that," Levine said.
So the devices will handle their own processing and storage, while the cloud will morph into the big strategic brains behind it all. These smart machines will send only the most important bits to the cloud. The cloud will analyze, then share what it learned with all of the devices.
In this way, they will all learn from one another.
"And that's how devices will get smarter," Levine said.
Looking to invest
Edge computing is a natural next step from cloud computing. The computer industry shifts back and forth from centralized computing, which has lots of power but is far away from the person or device using it, to local computing, which is close to the action but messy and hard for a user to harness all of its capacity.
For instance, mainframes (centralized computing) gave rise to PCs and client/server (decentralized), which gave rise to the cloud (centralized). So decentralized is due next. This is the breathing in and out of the computer industry.
Now he's looking to fund entrepreneurs working on edge computing, which he sees as the next enormous change in computing, the real result of the internet of things, he told Business Insider.
He's not the only one who's starting to recognize the edge. The term "edge computing" is being tossed around in the trade press. Cisco, which calls this concept "fog computing," launched a consortium called OpenFog. And the telecom industry is in the "let's debate what this all means" stage.
Levine said we'll start to see edge computing come online in a big way within the next five years.
He gave a 30-minute presentation at the recent Andreessen Horowitz Tech Summit that deftly explains it all.
http://www.vimeo.com/video/196002313
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