Home > Cloud Computing > Coghead Closes and It’s the Death Knell For Cloud Computing!? Holy Hyperbole, Batman!

Coghead Closes and It’s the Death Knell For Cloud Computing!? Holy Hyperbole, Batman!

February 19th, 2009 Leave a comment Go to comments

This InformationWeek article took artistic license to lofty new levels in a single sentence as it described the demise of Cloud Computing PaaS vendor Coghead and the subsequent IP/Engineering purchase by SAP:

Bad news for cloud computing: Coghead — a venture-backed, online application development platform – is closing, leaving customers with a problem to solve.

It's indeed potentially bad news for Coghead's customers who as early adopters took a risk by choosing to invest in a platform startup in an emerging technology sector.  It's hardly indicative of an established trend that somehow predicts "bad news for Cloud Computing" as a whole.

It's a friendly reminder that "whens you rolls da dice, you takes your chances." Prudent and pragmatic risk assessment and relevant business decisions still have to be made when you decide to place your bets on a startup.  Just because you move to the Cloud doesn't mean you stop employing pragmatic common sense. I hope these customers have a Plan B.

This is the problem again with lumping all of the *aaS'es into a bucket called Cloud; are we to assume Amazon's AWS (IaaS) and SalesForce.com (SaaS) are going to shutter next week?  No, of course not. Will there be others who close their doors and firesale?  Most assuredly yes, just like there are in most tech markets.

Here's what Coghead's CEO (in the same article, mind you) explained as the reason for the closure:

Though McNamara said business was continuing to grow rapidly, the recession ultimately did Coghead in, and Coghead began looking for buyers a few months ago. "Faced with the most difficult economy in memory and a challenging fundraising climate, we determined that the SAP deal was the best way forward for the company," McNamara wrote in a letter to customers that went out late Thursday

That's correct kids, even the almighty Cloud, the second coming of computing, is not immune to the pressures of running a business in a tough economy, especially the platform business…

First it was hype around the birth of Cloud and now it's raining epitaphs.  I call dibs on Amazon's SAN arrays!

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  1. February 19th, 2009 at 20:26 | #1

    "Customers can take the XML out that describes their application, but the reality is that only runs on Coghead, so customers will need to rewrite their app with something different,"
    It seems to me that you've got to have some type of vendor portability for a business critical application, or you are eventually going to get scrod. Even if someone like Salesforce.com likely will not fail overnight, they can discontinue a product or service and leave you hanging.
    I'll argue that this type of failure is different at the application layer, because if my network, hardware or OS vendor goes belly up, my stuff will still keep working & I have plenty of time to migrate to something else. If my application cloud provider (I lost track of your acronyms) croaks, they have my app and my data, and unless the app is portable, I've got a problem.

  2. February 19th, 2009 at 20:30 | #2

    It's not easy to hear about an emerging company being shuttered. But, as you point out, there's very little one can say about the destiny of cloud computing based on the failure of one PaaS company. It's trade press hyperbole, and we should all be smarter about that kind of swill by now.
    What can one say about a company whose "… business was continuing to grow rapidly…"? Well, for one thing, you can say that their costs were also significant, and that their model required an investment market willing to pony up significantly more cash to subsidize their growth until that happy day when the gap between revenues and costs started to widen. I have written and read a LOT of early stage company business plans. As a matter of fact, I'm in the midst of one written in late 2007 and early 2008. (Silly me!!) None of them have called out a global financial melt-down as a factor for which a contingency plan was put in place. Even in the best of times, companies make mistakes, things don't work out the way people plan, and not because the people involved were careless or stupid. It's the way this business works.
    As for the customers who "pay your money, roll the dice, take your chances"… well, yes that's the chance everyone takes in bringing in something that's new and not (yet ?) built around standards that permit transport/export/import to a different vendor's product. If the value proposition makes sense, and the customer figures in the price and the risk-reward, it's a choice worth making. (I'd like to point out here that — strange as it may seem — there are projects using established companies which, after a lot of money, elapsed time and disruption, don't result in success. Not only that, the resulting failed project yields no salvagable parts.)
    Now, what this DOES emphasize is the importance of standards (de facto or de jure) by which interoperability or portability can be assured. Remember… the fear of "cloud vendor lock-in" doesn't only apply to that scenario in which the vendor has captured the customer and is "extorting" unreasonable fees. Lock-in also applies to being hand-cuffed to a boat anchor with no ship to prevent it (and the customer) from sinking into the depths. It argues for minimum sufficient means by which a customer can be assured of a migration path… not necessarily a cost-free, frictionless move from one platform to another, but an assurance of salvagability at a cost that's significantly less than a 100% do-over.

  3. February 19th, 2009 at 20:35 | #3

    Indeed…which is why you better damned well understand what happens when THAT happens. Nothing particularly new there, right?
    Proprietary solutions without standards for portability and interoperability must be taken into account whether you're moving to the Cloud or simply outsourcing operational responsibilities of a piece of your infrastructure.
    Welcome to the nasty realities of vendor lock-in. It should come as no surprise to anyone that it looks the same and has many of the same consequences with Cloud as it does anywhere else.
    This sort of thing works up and down the SPI model, not just with PaaS, but also with IaaS and SaaS.

  4. February 19th, 2009 at 20:38 | #4

    I think my reply to Michael (which didn't show as such) crossed the wires with your comment.
    Spot on and synched, Captain!

  5. February 19th, 2009 at 21:05 | #5

    Thanks. We're definitely of a single mind on this.
    There are going to be a number of small companies going dark in the next year, and for both good reasons as well as unfortunate circumstances that are simply that… unfortunate, including a really stinkin' economy.
    That said, in ANY economy, the number of companies we see in any of these areas… particularly virtualization enablement and cloud enablement … is not supportable. And, it's like this whenever there's a highly contagious technology meme.
    Although there's little detail about Coghead, it's to Paul McNamara's credit that the company saw the reality of their position (for whatever reason) months ago and seemed to be responsible in the actions they took.

  6. February 24th, 2009 at 01:47 | #6

    Well, business is business and it's always about taking chances. The other thing is when you see the situation is really bad and you reached a deadlock, there is no excuse to keep the truth to yourself as Coghead did.
    Some vendors have developed special migration offer for Coghead customers, but its really painful to start from the ground up, let alone app functionality the user had already developed.

  7. John P
    February 25th, 2009 at 04:30 | #7

    Among all the companies offering to help Coghead customers, an interesting case comes from Wolf Frameworks, migrating coghead based applications without rebuilding the app design. check it out here: http://www.powerinthecloud.com/blog/2009/2/24/a-n

  1. August 8th, 2009 at 14:52 | #1