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Mesosphere was born as the commercial face of the open source Mesos project. It was surely a clever solution to make virtual machines run much more efficiently, but times change and companies change. Today the company announced it was changing its name to Day2IQ or D2IQ for short, and fixing its sights on Kubernetes and cloud native, which have grown quickly in the years since Mesos appeared on the scene.
D2IQ CEO Mike Fey says that the name reflects the company’s new approach. Instead of focusing entirely on the Mesos project, it wants to concentrate on helping more mature organizations adopt cloud native technologies.
“We felt like the Mesosphere name was somewhat of constrictive. It made statements about the company that really allocated us to a given technology, instead of to our core mission, which is supporting successful Day Two operations, making cloud native a viable approach not just for the early adopters, but for everybody,” Fey explained.
Fey is careful to point out that the company will continue to support the Mesos-driven DC/OS solution, but the general focus of the company has shifted, and the new name is meant to illustrate that. “The Mesos product line is still doing well, and there are things that it does that nothing else can deliver on yet. So we’re not abandoning that totally, but we do see that Kubernetes is very powerful, and the community behind it is amazing, and we want to be a value added member of that community,” he said.
He adds that this is not about jumping on the cloud native bandwagon all of a sudden. He points out his company has had a Kubernetes product for more than a year running on top of DC/OS, and it has been a contributing member to the cloud native community.
It’s not just about a name change and refocusing the company and the brand, it also involves several new cloud native products that the company has built to serve the type of audience, the more mature organization, that the new name was inspired by.
For starters, it’s introducing its own flavor of Kubernetes called Konvoy, which it says, provides an “enterprise-grade Kubernetes experience.” The company will also provide a support and training layer, which it believes is a key missing piece, and one that is required by larger organizations looking to move to cloud native.
In addition, it is offering a data integration layer, which is designed to help integrate large amounts of data in a cloud-native fashion. To that end, it is introducing a Beta of Kudo, an open source cloud-native tool for building stateful operations in Kubernetes. The company has already donated this tool to the Cloud Native Computing foundation, the open source organization that houses Kubernetes and other cloud native projects.
The company faces stiff competition in this space from some heavy hitters like the newly combined IBM and Red Hat, but it believes by adhering to a strong open source ethos, it can move beyond its Mesos roots to become a player in the cloud native space. Time will tell if it made a good bet.
Wavecell, a cloud-communications platform for companies in Southeast Asia, announced today that it has been acquired by 8×8 in a deal worth about $ 125 million. The acquisition will help San Jose, California-based 8×8 expand in Asia, where Wavecell already has offices in Singapore, Indonesia, the Philippines, Thailand and Hong Kong.
Wavecell’s cloud API platform, which includes SMS, chat, video and voice messaging, is used by companies such as Paidy, Lalamove and Tokopedia. It has relationships with 192 network operators and partners like WhatsApp and claims its infrastructure is used to share more than two billion messages each year.
The terms of the deal includes $ 69 million in cash and about $ 56 million in 8×8 common shares. Founded in 2010, Wavecell’s investors included Qualgro VC, Wavemaker Partners and MDI Ventures.
In a prepared statement, 8×8 CEO Vik Verma said “8×8 is now the only cloud provider that owns the full, global-scale, cloud-native, technology stack offering voice, video, messaging, and contact center delivered both as pre-packaged applications and as enterprise-class APIs. We’re excited to welcome the Wavecell employees to the 8×8 family. We now have a significant market presence in Asia and expect to continue to expand in the region and globally in order to meet evolving customer requirements.”
While AWS leads the cloud infrastructure market by wide margin, Microsoft isn’t doing too badly, ensconced firmly in second place, the only other company with double-digit share. Today, it announced a big deal with AT&T that encompasses both Azure cloud infrastructure services and Office 365.
A person with knowledge of the contract pegged the combined deal at a tidy $ 2 billion, a nice feather in Microsoft’s cloud cap. According to a Microsoft blog post announcing the deal, AT&T has a goal to move most of its non-networking workloads to the public cloud by 2024, and Microsoft just got itself a big slice of that pie, surely one that rivals AWS, Google and IBM (which closed the $ 34 billion Red Hat deal last week) would dearly have loved to get.
As you would expect, Microsoft CEO Satya Nadella spoke of the deal in lofty terms around transformation and innovation. “Together, we will apply the power of Azure and Microsoft 365 to transform the way AT&T’s workforce collaborates and to shape the future of media and communications for people everywhere,” he said in a statement in the blog post announcement.
To that end, they are looking to collaborate on emerging technologies like 5G and believe that by combining Azure with AT&T’s 5G network, the two companies can help customers create new kinds of applications and solutions. As an example cited in the blog post, they could see using the speed of the 5G network combined with Azure AI-powered live voice translation to help first responders communicate with someone who speaks a different language instantaneously.
It’s worth noting that while this deal to bring Office 365 to AT&T’s 250,000 employees is a nice win, that part of the deal falls on the under the SaaS umbrella, so it won’t help with Microsoft’s cloud infrastructure marketshare. Still, any way you slice it, this is a big deal.
Cloud gaming — however a company chooses to define that — is shaping up to be a big part of the next generation of consoles and other platforms. But Mario creator and Nintendo veteran Shigeru Miyamoto says his company won’t be so quick to jump on the bandwagon.
Speaking to shareholders at Nintendo’s annual general meeting, Miyamoto and other executives addressed a variety of issues, among them what some interpret as a failure to keep up with the state of the industry. Sony and Microsoft (together, amazingly) are about to lock horns with Google, Nvidia, and others in the arena of game streaming, but Nintendo has announced no plans whatsoever regarding the powerful new technology.
“We believe it is important to continue to use these diverse technical environments to make unique entertainment that could only have been made by Nintendo,” he said. “We have not fallen behind with either VR or network services… Because we don’t publicize this until we release a product, it may look like we’re falling behind.”
But although this hinted that Nintendo is working in this direction, Miyamoto didn’t sound convinced that cloud gaming was a home run.
“I think that cloud gaming will become more widespread in the future, but I have no doubt that there will continue to be games that are fun because they are running locally and not on the cloud,” he said.
The Nintendo focus on local multiplayer and complete offline single-player games is certainly emblematic of this point of view. And while Nintendo has been slow to adopt the latest gaming trends, it has shown that it can pull them off very well, indeed like no other, for example with the excellent Splatoon 2 and its constantly evolving seasons and events.
Nintendo President Shuntaro Furukawa said they see how gaming technology is evolving and that it’s important to “keep up with such changes,” but like Miyamoto made no indication that there was anything concrete on the way.
Instead, he indicated (again in true Nintendo style) that the company would reap the benefits of cloud gaming whether or not it took part in the practice.
“if these changes increase the worldwide gaming population, that will just give us more opportunities with our integrated hardware and software development approach to reach people worldwide with the unique entertainment that Nintendo can provide,” he said.
In other words, a rising tide lifts all boats, and if the others did the work to raise the water level, well, that’s their business.
The rumor on everyone’s mind after E3 is whether a new Switch or Switches are on the way. Naturally Furukawa demurred, saying that of course they were aware of speculation, but wouldn’t comment. However, he added: “It would spoil the surprise for consumers and is against the interests of our shareholders, so we are withholding any discussion.”
Of course a new Switch is on the way — that’s about as much as a confirmation anyone would be able to get from Furukawa or the other highly trained executives at Nintendo, even if the new hardware was coming out tomorrow. But at this rate it seems more likely that the new hardware will be timed to pull in buyers around the holidays — which may have the knock-on effect of taking the wind out of Microsoft and Sony’s sails (and sales) when they debut their next-generation consoles next year.
Independent restaurant owners may be doomed, and perhaps grocery stores, too.
Such is the conclusion of a growing chorus of observers who’ve been closely watching a new and powerful trend gain strength: that of cloud kitchens, or fully equipped shared spaces for restaurant owners, most of them quick-serve operations.
While viewed peripherally as an interesting and, for some companies, lucrative development, the movement may well transform our lives in ways that enrich a small set of companies while zapping jobs and otherwise taking a toll on our neighborhoods. Renowned VC Michael Moritz of Sequoia Capital seemed to warn about this very thing in a Financial Times column that appeared last month, titled “The cloud kitchen brews a storm for local restaurants.”
Moritz begins by pointing to the runaway success of Deliveroo, the London-based delivery service that relies on low-paid, self-employed delivery riders who deliver local restaurant food to customers — including from shared kitchens that Deliveroo itself operates, including in London and Paris.
He believes that Amazon’s recent investment in the company “might just foreshadow the day when the company, once just known as the world’s largest bookseller, also becomes the world’s largest restaurant company.”
That’s bad news for people who run restaurants, he adds, writing, “For now the investment looks like a simple endorsement of Deliveroo. But proprietors of small, independent restaurants should tighten their apron strings. Amazon is now one step away from becoming a multi-brand restaurant company — and that could mean doomsday for many dining haunts.”
The good news . . . and the bad
He’s not exaggerating. While shared kitchens have so far been optimistically received as a potential pathway for food entrepreneurs to launch and grow their businesses — particularly as more people turn to take out — there are many downsides that may well outweigh the good, or certainly counteract it.
Last year, for example, UBS wrote a note to its clients titled “Is the kitchen dead?” wherein it suggested the rise of food delivery apps like Deliveroo and Uber Eats could well prove ruinous for home cooks, as well as restaurants and supermarkets.
The economics of food delivery have grown too alluring, suggested the bank. It’s already inexpensive because of cheap labor — and that cost center will disappear entirely if delivery drones take flight. Meanwhile, food will become cheaper to make because of central kitchens, the kind that Deliveroo is opening and Uber is reportedly venturing into. (In March, Bloomberg reported that Uber is testing out a program in Paris where it’s renting out fully equipped, commercial-grade kitchens to serve businesses that sell food on delivery apps like Uber Eats.)
The favorable case for cloud kitchens argues that restaurants renting from them pay less than they would for their own real estate. But the reality is also that most of the businesses moving into them right now aren’t small restaurateurs but fast-food brands that already have a following and aren’t known for their emphasis on food quality but instead for quickly churning out affordable food.
As Eric Greenspan, a chef who has appeared regularly on the Food Network and opened and closed numerous restaurants, says in a short new documentary about cloud kitchens: “Delivery is the fastest growing market in restaurants. What started out as 10 percent of your sales is now 30 percent of your sales, and [the industry predicts] it will be 50 to 60 percent of a quick-serve restaurant’s sales within the next three to five years. So you take that, plus the fact that quick-serve brands are kind of the key to getting a fat payout at the end of the day . . .”
Greenspan continues on to explain that during an age when fewer people frequent restaurants, running one simply makes less and less sense. “[Opening] up a brick-and-mortar restaurant these days is just like giving yourself a job. Now [with centralized kitchens], as long as the product is coming out strong, I don’t need to be there as a presence. I can quality control remotely now. I can go online and [log out of a marketplace Uber Eats or Postmates] and not piss off any customers, because if I just decided to close the restaurant one day, and you drove over and it was closed, you’d be pissed. But if you’re looking for [one of my restaurants] in Uber Eats and you can’t find it because I turned it off, well, you’re not pissed. You just order something else.”
Big players only need apply . . .
The model works for now for Greenspan, who is operating out a cloud kitchen in L.A that happens to belong in part to Uber cofounder Travis Kalanick. He was quicker than some to grok the opportunity that shared kitchens present. In fact, it was early last year that Kalanick announced he was investing $ 150 million in a startup called City Storage Systems that focused on repurposing distressed real estate assets and turning them into spaces for new industries, like food delivery.
That company owns CloudKitchens, which invites food chains — as well as independent restaurant and food truck owners — to lease space in one of its facilities for a monthly fee, charging additional fees for data analytics that it says are meant to help the entrepreneurs boost their sales.
The pitch to restaurateurs is that CloudKitchens can increase their sales while reducing their overhead. But the company is also amassing all kinds of data about its tenants and their customer preferences in the process — data that could presumably benefit CloudKitchens in various ways. Little wonder that Amazon wanted entrée into the industry, or that there is already at least one serious competitor in China — Panda Selected — which raised $ 50 million led by Tiger Global Management earlier this year.
No one can fault savvy entrepreneurs for seizing on what looks like a gigantic business opportunity. Still, the kitchens, which make all the sense in the world from an investment standpoint, should not be embraced so readily by everyone else as a panacea.
Ripple effects . . .
One of the biggest areas of concern is that in order to work, central kitchens rely on the same people who drive Ubers and handle food deliveries — people who aren’t afforded health benefits and whose financial picture is precarious as a result. (As with Uber drivers, Deliveroo employees tried to gain status as “workers” last year with better pay, but they were denied them. The EU Parliament more recently passed new rules to protect so-called gig economy workers, though they don’t go far. Meanwhile, in the U.S, Uber and Lyft continue to fight legislation that would give employee status to contract workers.)
Matt Newberg, a founder and foodie from New York, says he could see the writing on the wall when he recently toured CloudKitchen’s two L.A. facilities along with the shared kitchens of two other companies: Kitchen United which last fall raised $ 10 million from GV, and and Fulton Kitchens, which offers commercial kitchens for rent on an annual basis.
Newberg filmed what he saw (which you can watch below) and suggests that he was taken aback by the conditions of the first facility that CloudKitchens opened and operates in South L.A.
Though most restaurant kitchens are chaotic scenes, Newberg said that as “someone who loves food and sustainability” the facility didn’t feel “very humane” to him when he walked through it. It’s windowless for one thing (it’s a warehouse). Newberg also says it was filled with people who appeared to him to be low-wage workers. Not last, he says he also counted 27 kitchens packed into what are “maybe 250-square-feet to 300 square-foot spaces,” and a lot of people who appeared to be in panic mode.
“Imagine lots of screaming, lots of sirens triggered when an order gets backed up, tablets everywhere.”
Adds Newberg, “When i walked in, I was like, holy shit, no one even knows this exists in L.A. It felt like Ground Zero. It felt like a military base. I mean, it seemed genius, but also crazy.”
Newberg says CloudKitchen’s second, newer location is far nicer, as are the facilities of Kitchen United and Fulton Kitchens. “That [second CloudKitchen warehouse] felt like a WeWork for kitchens. Super sleek. It was as quiet as a server farm. There were still no windows, but the kitchens are nicer and bigger.”
Growing pains . . .
Emails to CloudKitchens went unreturned, but every startup has growing pains, and presumably, shared kitchen companies are not immune to these. Still, Moritz, the venture capitalist, warns that most restaurateurs should remain wary of them. Writing in the FT, he says that in the early 2000s, his firm, Sequoia, invested in a chain of kebab restaurants called Faasos that planned to deliver meals to customers’ homes but wound up getting crushed by high rents and turnover, among other things.
To save itself, it opened a centralized kitchen to sell kebobs. Now, he writes, Fassos produces a wide variety of foods, including other Indian specialities but also Chinese and Italian dishes under separate brand names.
It’s the same playbook that Eric Greenspan is using, telling Food & Wine magazine last year that his goal was to have no fewer than six delivery-only concepts running simultaneously. Greenberg, who is obviously media savvy, can probably pull it off, too, just like Fassos. But for restaurants that are not known franchises or have the star appeal of celebrity chef, the future might not look so bright.
Writes Moritz: “In some markets there is still an opportunity for hardened restaurant and kitchen operators — particularly if they are gifted in the use of social media, to build a following and refashion themselves. But they need to move quickly before it becomes too expensive to compete with the larger, faster-moving companies. The mere prospect of Amazon using cloud kitchens to provide cuisine catering to every taste — and delivering these meals through services such as Deliveroo — should be enough to give any restaurateur heartburn.”
It should also worry people who care about their neighborhoods.
Cloud kitchens may make it faster and cheaper than ever to order take-out. But there will be consequences. Most of us simply have yet to imagine them.