The Layered Metaphor for Technology Development

The author argues that the "layering" of technology has been beneficial for the development of IT systems and networks. This specialization allows for best-of-breed solutions to emerge at each layer and enables individuals to focus on specific areas without needing to be experts in every technology.

• The OSI model is a clear example, with seven layers ranging from the physical layer (signal transmission) to the application layer.
• Even a personal computer can be viewed as a stack, with hardware manufacturers responsible for the physical layer, Microsoft for the operating system, and application companies building on top.

Amazon's Role in Cloud Services

The article focuses on how the internet cloud has started forming into layers over the past five years, and how this is a driver of innovation. The author highlights the key layers in the cloud services stack and their respective market leaders.

Storage: The Foundation of the Cloud

The author recounts his experience starting two companies, the first in 1999 and the second in 2005, to illustrate the shift from physical infrastructure to cloud storage.

• In 1999, he spent millions on hardware infrastructure, including Sun servers, Solaris operating system, Oracle databases, EMC storage, and more. Hardware accounted for over 10% of the initial funding round.
• In 2005, he embraced open-source software and still invested in physical infrastructure but at a lower cost. However, he was hesitant to move storage to Amazon's S3 service at the time.
• He eventually realized the benefits of cloud storage, including scalability, affordability, and reliability.

Processing: The Engine of the Cloud

Similar to storage, the author initially hesitated to use Amazon's EC2 (Elastic Compute Cloud) service for real-time processes but later acknowledged its reliability and performance.

• He notes how Amazon proved its ability to meet performance targets, leading many startups to rely on its cloud computing services.
• This shift allowed companies to reduce their hardware costs and focus on software development.

Management: Orchestrating the Cloud

As companies adopted cloud services, the need for management services arose. The author highlights two key players in this layer: RightScale and Okta.

• RightScale introduced auto-scaling, enabling automatic server provisioning and decommissioning based on traffic fluctuations.
• Okta addresses the need for cross-platform management tools for enterprises using multiple cloud-based applications.

Business Logic: The Application Layer

This layer focuses on the applications we use daily, such as websites, social media platforms, and business tools. The author emphasizes that these applications rely on business logic created by software companies.

• He mentions that the "business logic" layer is where user interaction takes place, with input screens, search requests, and data processing.

Proprietary Databases: The Data Bottleneck

The author points out a significant gap between the business logic layer and underlying infrastructure, specifically in data management. Companies often face high licensing costs for proprietary databases or invest considerable time and resources to build their own.

• He gives examples of companies like Yelp, FourSquare, and DailyBurn that needed to build or acquire vast datasets to support their operations.

Factual: The Cloud Data Platform

The article introduces Factual as a data-as-a-service platform that aims to solve the problem of expensive and time-consuming data acquisition. The author emphasizes Factual's ability to provide high-quality, affordable, and readily available data, democratizing access to information.

• He compares Factual to Wikipedia, arguing that crowd-sourced data can be more accurate and accessible than traditional methods.
• Factual uses algorithms to crawl the web for structured data and employs heuristic techniques to ensure quality.
• The platform allows third-party developers to consume and contribute data.

The Future of Cloud Data: Innovation and Opportunity

The author believes that cloud data will become the next major layer of the internet, supporting both consumer and business applications. He envisions a future where developers have access to vast, readily available data sets, accelerating innovation and reducing development costs.

• He cites the example of Y Combinator and TechStars startups, suggesting that access to Factual's dataset could significantly enhance their projects.
• He also discusses the potential of cloud data for specific sectors, such as healthcare, finance, and social networking.

Emerging Layers: The Future of the Internet Cloud

The article concludes by mentioning other emerging layers in the cloud services stack, such as the mapping layer (represented by SimpleGeo) and the social graph layer.

• He argues that horizontal specialization will be crucial for companies and the tech ecosystem as a whole.
• He acknowledges that the future of the cloud will likely involve new layers and unforeseen advancements.