Microsoft added a number of interesting new features to Silverlight, including multi-touch support, improved text quality, support for a number of new video codecs (including H.264), better 3D effects, and automated search engine optimization. Users can now also take Silverlight applications and run them outside of the browser and even offline. Out-of-browser applications will run in a secure sandbox mode, which makes installing the apps very easy. These apps will also be able to auto-update.

NBC Universal also announced that it will use Silverlight to power its online coverage of the 2010 Vancouver Olympic Games, which will include 720p HD streaming (interestingly, NBC doesn't seem to use Silverlight outside of its coverage of the Olympics).

You can find download links for the Silverlight 3 runtime, SDK, and documentation here.

Expression Blend 3 Preview

Microsoft also showed a preview of Expression Blend 3, its development tool for Silverlight and WPF applications. Among other things, Blend now makes it easier to create prototypes and then immediately take these and turn them into working applications. Blend 3 also now integrates directly with Adobe Photoshop and Illustrator, which makes prototyping in the application even easier.

Azure

Azure, Microsoft's cloud computing initiative, also saw some important updates today. Developers can now host their data on two U.S.-based datacenters, giving them the ability to store their data in multiple locations, while also enhancing performance by reducing network latency. Developers will now also be able to run applications written in non-.NET languages on Azure, thanks to the addition of support for FastCGI. Because of this, developers will now be able to run PHP or Ruby applications on Azure, for example. According to Microsoft, the final version of the Azure platform is still on track for a launch by the end of 2009.

This is a guest post by Paul Miller, a Semantic Web and Cloud Computing expert who was most recently a Technology Evangelist at UK technology company, Talis.

Not merely some game of buzzword bingo on an unprecedented scale, cloud computing is coming into its own, and it is becoming increasingly easy to see the opportunities for a significant shift in the way we access computational resources and to recognize that the walls separating organizations from their peers, partners, competitors, and customers will become ever-more permeable to the flow of data through which those distant machines will compute.

There are many areas to understand that have already been ascertained in related fields, and many ideas unique to this space to discover. One early challenge is to carve a distinct niche for the place we are moving towards with such rapidity. Far more than "just" a cloud, it is an evolutionary cycle beyond the playful flippancy that diminishes so many of Web 2.0's poster children, and it is difficult to relate to mainstream misconceptions of the semantic web's complexity. Yet this new place is greater than the sum of its parts. So do we sustain the already ephemeral notion of cloud computing? Do we appropriate the "next big thing" label of Web 3.0? Or do we need a fresh attitude towards business computing's apparently insatiable desire to apply labels?

First, though, let us consider the shape of this thing that is taking on more substance with each passing day.

Reporting on last month's Web 2.0 Summit in San Francisco, CNET's Dan Farber notes that "the cloud was omnipresent," before closing his report with the observation that "cloud computing won't be very compelling without what is variously called Web 3.0 or the semantic web."

Indeed.

For too long, the emphasis in cloud computing circles has been almost exclusively on the provision of rapidly scalable and ad hoc remote computing on top of cost-effective commodity hardware. The cloud play by Salesforce, Amazon's EC2, and the rest has been dominated by the implicit assumption that these cloud-based resources are an extension of the corporate data center; a way to simply reduce the costs of enterprise computing.

There is value down this road, but there are bigger opportunities.

Nick Carr is among those who fear that a small number of players may come to dominate the provision of cloud resources. He outlines many of these arguments in his latest book, The Big Switch, and more recently had an interesting discussion with Tim O'Reilly on the topic. Justin Leavesley shares some of Talis' views on the economics behind all of this over on Nodalities, broadly agreeing with Tim O'Reilly:

"It's pretty clear that utility cloud computing is highly capital intensive so it should come as no surprise that there are powerful economies of scale to be had. But the bottom line is that you are talking about plant and power. These are rival goods, scarce resources that are created and consumed. This is not different from many utility industries with one exception: the distribution network has global reach, already exists and is very cheap compared to existing utility distribution networks. It is a lot cheaper to access a computing resource on the other side of the planet than it is to send electricity or gas across the globe... [So] what is to stop economies of scale turning this into a global natural monopoly?

"Actually, unless there are some large network effects, quite a lot stops single companies ruling entire industries. For a start, without network effects, economies of scale tend to run out: the curve is usually U-shaped. Telecoms, gas, rail companies have strong network effects from their infrastructure -- it makes little sense to have duplicate rail networks or gas networks in a country. Utility computing does not have this advantage because the distribution network is not owned by them."

Continuing the conversation, Carr summarizes the usual widely held perception of cloud computing nicely:

"The history of computing has been a history of falling prices (and consequently expanding uses). But the arrival of cloud computing -- which transforms computer processing, data storage, and software applications into utilities served up by central plants -- marks a fundamental change in the economics of computing. It pushes down the price and expands the availability of computing in a way that effectively removes, or at least radically diminishes, capacity constraints on users. A PC suddenly becomes a terminal through which you can access and manipulate a mammoth computer that literally expands to meet your needs. What used to be hard or even impossible suddenly becomes easy."

This is quite true, but it continues and further entrenches the misapprehension that the cloud is little more than an adjunct to the corporate data centre, a misapprehension that we shall get down to challenging in a moment.

First, though, there is a growing recognition that today's market leaders will inevitably need to become more interoperable if this business segment, and they, are to grow. The proprietary nature of their offerings today may allow them to innovate ahead of the standards process (which will be shaped in large part by the lessons they learn), and the relatively high cost of switching to a competitor today may give each the critical mass on which to invest and grow; but the characteristics of the current market are clearly the characteristics of a nascent market: computing's new Wild West. As so often before, standardization, true competition, mainstream adoption, and commoditization will all follow as we move towards phases 2 and 3 of Gartner analyst Thomas Bittman's intriguing analysis of the "evolution of the cloud computing market." Similarly, Erica Naone offered a useful overview of cloud computing's open-source component in Technology Review last month. None of the projects she covers are a significant challenge to Amazon's EC2, Microsoft's Azure, Salesforce's Force.com or Google's App Engine... yet. But together, they help to keep these commercial entrants honest and remind all of us that switching costs can be brought very low indeed if the pain of the status quo becomes too great.

Writing "Welcome to the Data Cloud?" for ZDNet in October, I began to explore the important role that data could and should play in the cloud:

"Just as 'we' used to duplicate and under-utilize computational resources, so we do something very similar with our data. We expensively enter and re-enter the same facts, over and over again. We over-engineer data capture forms and schemas, making collection exorbitantly expensive, whilst often appearing to do all we can to limit opportunities for re-use. Under the all-too-easy banners of 'security' and 'privacy' we secure individual data stores and fail to exploit connections with other sources, whether inside or outside the enterprise.

"In a small way, the efforts of the Linked Data Project's enthusiasts have demonstrated how different things should be. The cloud of contributing data sets grows from month to month, and the number of double-headed arrows denoting a two-way linkage is on the rise. Even the one-way relationships that currently dominate the diagram are a marked improvement on 'business as usual' elsewhere on the data web; even in these cases, data from a third party is being re-used (by means of a link across the web) rather than replicated or re-invented. Costs fall. Opportunities open up. Both resources, potentially, improve. The strands of the web grow stronger."

It is here, in the use and reuse of data, that the potential of the cloud will be realized. Back to the previously cited conversation between Nick Carr and Tim O'Reilly, O'Reilly himself comes very close to saying so:

"In short, Google is the ultimate network effects machine. 'Harnessing collective intelligence' isn't a different idea from network effects, as Nick argues. It is in fact the science of network effects -- understanding and applying the implications of networks.

"I want to emphasize one more point: the heart of my argument about Web 2.0 is that the network effects that matter today are network effects in data. My thought process (outlined in 'The Open Source Paradigm Shift' and then in 'What is Web 2.0?,' went something like this:

1. The consequence of IBM's design of a personal computer made out of commodity, off-the-shelf parts was to drive attractive margins out of hardware and into software, via Clayton Christensen's 'law of conservation of attractive profits.' Hardware became a low margin business; software became a very high margin business.
2. Open-source software and the standardized protocols of the Internet are doing the same thing to software. Margins will go down in software, but per the law of conservation of attractive profits, this means that they will go up somewhere else. Where?
3. The next layer of attractive profits will accrue to companies that build data-backed applications in which the data gets better the more people use the system. This is what I've called Web 2.0.

It's network effects (perhaps more simply described as virtuous circles) in data that ultimately matter, not network effects per se."
(my emphasis)

Talis CTO Ian Davis would appear to agree, commenting:

"People need to be investing in their data as the long-term carrier of value, not the applications around them... The data is more likely to persist than the software, so it's important to get the data right and take care of it."

Salesforce CEO Marc Benioff, too, used his Dreamforce User Conference this month to move a company long associated with the "data-centre extending cloud" firmly in the direction of embracing data and the network. As Krishnan Subramanian noted on Cloud Ave before the keynote:

"Till now, the Force.com platform served business users to develop apps that can be used internally within an organization. They have to tap into Force.com APIs from outside platforms to offer customer-facing web apps. With the new initiative, it becomes easy for customers to allow the Internet users to 'interact' with their data."

Over on VentureBeat, Anthony Ha had more:

"Salesforce.com wants to become an even big player in the cloud computing market with a new service called Force.com Sites, which allows companies to host public-facing web applications in the Force.com platform. That means Salesforce --- nominally a maker of customer relationship management (CRM) software, but also an increasingly important platform for business-related applications --- is moving closer to direct competition with cloud giants like Amazon Web Services and the Google App Engine."

Locked away within an organization and only accessed by that organization's applications, data cannot be put to full use. Much of the value in each individual datum lies in comparing it to other measurements, in delving into detail, and in pulling back to observe the bigger picture.

Organizations that believe that either the big picture or the detail resides in their own systems alone are woefully misguided. Even the most specialized, proprietary, and confidential of data only reveal their true value when put in context, and that context is all the richer when informed by numerous perspectives.

Cloud computing, and the various SaaS movements, have finally brought us to a place where the fiercely guarded and tightly delineated boundaries between the organization and those outside it may become permeable in ways that should benefit the organization rather than threaten it. Data is just a resource. In the terminology of Geoffrey Moore, most data are often mere context, and there are savings to be made both in reusing the data of others and in re-selling necessary context to those prepared to pay. Some data, of course, is core to the business, and this may continue to receive the same reverence and protection that we misguidedly apply to the entire database today. Even here, though, the opportunities afforded by (controlled?) sharing may outweigh any desire to maintain data protectionism.

The language of Groundswell offers opportunities to go further, to embrace and exploit the behaviors and motivations of customers and the wider web.

There is clearly far more to say in clarifying this view of both the components and the whole, but at over 2,000 words, this post has perhaps gone on long enough.

For now, then, we should conclude by asking what role the semantic web has to play in any of this. The semantic web, with its unadulterated recognition of the primacy of the web's hyperlink? The semantic web, designed from the outset to convey context and relationships derived from data spread across the web? The semantic web, supported by technologies that operate openly and on the scale of the web?

Isn't it obvious yet?

Returning to the Web 2.0 Summit with which we began, another presentation was from Kevin Kelly, founding editor of Wired Magazine. Steve Gillmor and Nicole Ferraro reported on his presentation at the time, and the video was subsequently shared online, echoing Kelly's earlier presentation (which I greatly enjoyed), in which he argued:

"You have to be open to having your data shared... which is a much bigger step than just sharing your web pages or your computer."

Yep, here we go, on a journey toward Kevin Kelly's "World Wide Database," which will take in a lot of the shifts facing enterprise computing along the way.

This is a guest post by Paul Miller, a Semantic Web and Cloud Computing expert who was most recently a Technology Evangelist at UK technology company, Talis.

Web Products

Ray Ozzie Announces Windows Azure - "Windows in the Cloud"

Ray Ozzie opened the Microsoft PDC '08 this week with a keynote speech. In it he announced Windows Azure, Microsoft's "Windows in the cloud". It is a new service based operating environment. He described it as a massive highly scalable service platform. What was released this week is just a fraction of what it will become. It will be Microsoft's highest scalable system enabling people and companies to create services on the Web.

See also our analysis, Microsoft Azure Aims to Re-define the OS

Google Releases Third Beta of Chrome: Better Security and Performance

Google released a new beta version of Chrome, Google's first web browser, which addresses a number of issues we had noticed in earlier releases. Besides improving the performance and stability of a number of plugins, including Flash, Sliverlight, and Quicktime, as well as fixing some security issues, Google also finally added the ability to add words to the built-in spell checker.

Microsoft Office Comes to the Browser (Finally)

Microsoft announced this week at its PDC conference that the next release of Microsoft Office will include browser-based versions of some of its main office software products - Word, Excel, PowerPoint and OneNote. These will be "lightweight versions", but Microsoft told us yesterday that they'll still have rich functionality and will be comparable to Google's suite of online office applications. The apps will enable users to create, edit and collaborate on Microsoft Office documents through the browser. The apps will work in IE, Firefox and Safari browsers (no word on whether Google Chrome will be supported). Microsoft clarified in an email that these apps will use HTML and AJAX, but also Silverlight components.

Seven Must-Have Offline Apps For Your iPhone/iPod Touch

If you have an iPod Touch, then you know the benefit of finding apps that work offline. But some iPhone owners, too, need offline access from time-to-time. Maybe you spend your commute in an underground subway or perhaps your office building has shoddy cell coverage, or maybe you just want to use your iPhone on a plane...whatever the reason, offline access to apps is still a necessary evil these days.

SEE MORE WEB PRODUCTS COVERAGE IN OUR PRODUCTS CATEGORY

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Web Trends

How to Use the New Google Web Search RSS Feeds

Google's been the lone hold out among major search engines on RSS but the company quietly enabled feeds for web search results this week. The offering is pretty limited and frustrating, you have to go through Google Alerts to get an obscure RSS URL, but we offer a tutorial and some strategic advice in this post.

Web search RSS is useful for being alerted whenever search results for your keywords or link have changed; subscribing to at least a few searches will let you know when Google users are seeing something new in the first few pages of search results for your company name, for example.

LinkedIn, Stop Hiding People Behind Links

Last week LinkedIn announced an additional infusion of capital from strategic investors. The company has been around since 2003 and Bernard Lunn recently wrote an in-depth analysis of the LinkedIn business here on ReadWriteWeb. Most of us use LinkedIn a few times a week, yet almost no one is emotionally connected to the company. Isn't it strange that a brand which at its core is about connecting people, is rather bland and unexciting? LinkedIn as a company and brand has never paid attention to the human factor.

Google is Now an OpenID Provider

It was quite a good week for OpenID, an increasingly popular mechanism for creating and managing a single identity across the Internet. On Monday, Microsoft announced that it would give every Windows Live user an OpenID account, and later in the week Google announced a very similar plan.

Google will allow web services to join a limited test of an API based on the OpenID 2.0 protocol that will give Google Account users the option to sign in to websites with their Google credentials and without having to sign up for a new account at those sites.

Hulu: Ugly Duckling No More

It's hard to believe that it's been a year since Hulu - the joint online video venture between NBC Universal and News Corp. - began streaming content. Its initial reception, after months of anticipation and a good helping of ridicule, was less than warm. Old media companies trying to take on YouTube? Were they serious?

Clearly, they were. Fast forward to today - a year after the company released its private beta - and you'll hear a completely different story about Hulu. How did we get here? Let's take a look back at Hulu's first year.

SEE MORE WEB TRENDS COVERAGE IN OUR TRENDS CATEGORY

NEW ReadWriteWeb Product

Announcing a Major New ReadWriteWeb Project: The Jobwire

We're excited to introduce this week the launch of a new content channel here at ReadWriteWeb. It's called the ReadWriteWeb Jobwire and it's a site dedicated to reporting on people who have been hired for new jobs in tech, new media and related companies.

We've been working on it for months, well before the current economic climate unfolded, but we're hoping that a whole site of good news will serve our readers well in these troubled times. Companies are still hiring, people are still getting cool new jobs, and we're going to report on it. We invite you to check out the new Jobwire site to meet the Jobwire team, learn about our special guest editors and check out some of the great new jobs people have landed lately! Click here to read more and meet the Jobwire team.

RWW Enterprise Channel

The New Stack: SaaS, Cloud Computing, Core Technology

During the PC era, the technology stack was controlled by Microsoft Windows and Wintel - the "Wintel" era. We are now entering a new era, called variously 'Cloud' or 'SaaS' or 'Enterprise 2.0'. In this era everything is different - the stack, the players and the potential for value creation. Let's outline the basic shape of this emerging era, in particular defining what makes up the new stack.

Email us if you're interested in writing for ReadWriteWeb's Enterprise Channel.

SEE MORE ENTERPRISE COVERAGE IN OUR ENTERPRISE CHANNEL

That's a wrap for another week! Enjoy your weekend everyone.

In this era everything is different - the stack, the players and the potential for value creation. Let's outline the basic shape of this emerging era, in particular defining what makes up the new stack.

At the Top - SaaS: these are the end user services that we actually interact with, such as Basecamp. This is the "final mile". This is what we used to call application software, vertical systems or value added systems. Although SaaS is sometimes also used to describe the layer below, we prefer to label the top as SaaS and the middle as Cloud Computing. Typically this layer has had thousands of companies. These are our bootstrapped Gritty Entrepreneurs.

In the Middle - Cloud Computing: this is the Cloud where we witness the "sound and fury" of BigCos battling it out - Amazon, Google, Microsoft, IBM and others. This layer is the most fluid and where all the deals are. This layer can be seen as two layers, but the difference is very blurry. Some SaaS companies create some "middleware" that they position in this layer. Some start-ups create middleware as their primary focus, with an end game of getting acquired by one of the Cloud BigCos. Over time, these will tend to get rolled up into a few big platforms that compete by providing higher levels of abstraction for developers.

At the Bottom - Core Technology: this is what we might call "traditional Silicon Valley", hard core patent-protected technology sold to big companies that use it as part of their stack. Arista, the latest venture from Andreas Bechtolsheim falls into this category.

Spectators And Players

Most of us are spectators in the Cloud Computing game. It is fun to watch the big guys duke it out and ReadWriteWeb will continue to report on that. Entrepreneurs need to understand the strategies of the big players who will be their "platform partner". But we all have lots of opportunities to be players at the top of the stack, in the SaaS layer. This is where there are low barriers to entry, massively reduced R&D costs and incumbents who will be slow to embrace SaaS for fear of cannibalizing their core business.

Has The Stack Value Inverted?

Traditionally, value was at the bottom of the stack, which is why Microsoft and Intel were so dominant in the past. With a few notable exceptions like SAP, the top of the stack tended to be smaller companies.

It is possible that this has inverted, that the real value is now at the top of the stack and not at the bottom. For example, Arista will probably be very successful, but their market will be limited to the few companies who build huge data centers. Those clients will place huge orders but will also have a lot of negotiating clout.

Lock-In And Network Effects?

So maybe the value is all in the middle now? This is certainly where all the action is today. The two big questions at this layer are:

1. Lock-in? How easy will it be to move your SaaS service between Amazon AWS, Google App Engine, Microsoft Azure and other contenders? Today there is quite a lot of technical lock-in, you cannot move from one to another without some re-coding. But is that a big deal? No, because a) any Platform that jacks up prices will get hammered by their competitors and b) when you do need to move, it may require some coding changes but the move is transparent to end users. So, very little lock-in.

2. Viral Network Effects? Market leaders will get a lower cost of sale, but there is no social media viral effect at the Cloud Computing Platform layer.

Without Lock-In or Viral Network Effects, this layer will be commoditized. It will be very, very big but it will be a thin margin commodity business that is all about scale.

So The SaaS Cream Floats To The Top?

This is our theory. The value is with the small SaaS companies in the "final mile" interacting with end users. This is what we are seeing with our bootstrapped Gritty Entrepreneurs.

What About Players Across Layers?

Next week I will be at Dreamforce, the Salesforce.com annual event in San Francisco. Salesforce.com is the SaaS pioneer that defined the market. At some stage they decided that being on the top layer only was not enough and they created their Force.com "platform" on which others could create applications.

IBM also operates at many layers of the stack. But they do so with separate divisions that would be large companies in their own right.

It will be interesting to see how this stack evolves and specifically how well Salesforce.com succeeds with their mission to operate at both the top and the middle layer.

Ever since the announcement this morning, I've been pondering what Microsoft Azure means to Microsoft's core business - a little desktop operating system called Windows. So I asked Ray Ozzie: given that Microsoft is positioning Azure as an OS for cloud computing, what then is the relationship between Azure and the core Windows (in particular the new version, Windows 7)?

Ozzie's role at Microsoft is to be their lead architect of software systems, and so understandably he launched into a very conceptual answer to my question. He explained that both operating systems will develop alongside each other and that there will be a "bi-directional innovation transfer" between the two. He was pretty clear though that Azure is not designed to replace the desktop OS any time soon, although he said later in the interview that eventually people "will commonly think of this cloud thing as being just another computer". So in a sense what Microsoft is trying to do with Azure is re-define what an OS is, for the cloud computing age.

Azure is clearly Microsoft's response to a computing world going ever more deeper into the cloud (a.k.a. the Internet). Ozzie said that Windows Azure will be their backend of the cloud and the frontend will be a "multi-device world".

As explained in a white paper (docx file) on the Azure website, "Windows Azure runs on a large number of machines, all located in Microsoft data centers and accessible via the Internet."

Cannibalizing Desktop Windows?

It's difficult to fathom at this point if or how Azure will cannibalize Microsoft's core OS business.

I asked Ray Ozzie what will be the licensing implications - for example will enterprises be able to buy just an Azure licence and not [desktop] Windows? Bob Muglia, Senior Vice President of the Server and Tools Business, swooped in to answer that. He replied that enterprises will be able to mix and match - cloud and "on premise" (an apparently new term we've heard a lot today at PDC).

Muglia said that there will be a range of different licensing, just as currently there are lots of different licensing options for Windows Vista - versions for enterprises, students, and so on. There may even, hinted Muglia, be advertising-based licensing models for Azure.

Azure and Amazon

Earlier in the day I'd asked Daz Wilkin, of Microsoft's platform group, how Microsoft Azure compares to Amazon's cloud offerings. Wilkin stated that Amazon's system can be thought of as an "empty vessal", because developers basically pour all their software and effort into Amazon's system. Microsoft Azure on the other hand, according to Wilkin, is a "compute fabric" - the developer can focus on building the business logic and then scaling the platform to the demand. Azure takes away the "lower level complexities", according to Wilkin.

In the keynote today, Ray Ozzie was careful to heap praise on Amazon, saying that we all owe Amazon a debt of thanks for driving cloud computing forward. In the roundtable, Ozzie said that he hopes others do compete with Microsoft: "it'll be bad if we're the only ones doing this".

In our next post on Azure, we'll delve into the software implications of Microsoft Azure. For now, tell us how you think Azure relates to the desktop Windows OS? If you work in a corporation, let us know how you envision using these two different - yet intimately connected - operating systems.