Microsoft made an interesting HPC acquisition, and Andrew Ng is starting an AI fund

Microsoft announced on Tuesday that it has acquired Cycle Computing, a company that helps users run h
ARCHITECHT
Microsoft made an interesting HPC acquisition, and Andrew Ng is starting an AI fund
By ARCHITECHT • Issue #122
Microsoft announced on Tuesday that it has acquired Cycle Computing, a company that helps users run high-performance computing workloads in the cloud. I’ll skip over the newsy parts of this announcement and instead, for more details, point you to:
However, there are a few things about this acquisition that I think are worth calling out explicitly, some of which are glossed over in the coverage:
1. Cycle Computing began as an AWS-centric company (you can see some of my old Gigaom coverage of it here and here), and currently supports Azure and Google Cloud, as well. Microsoft has stated current customers can keep running on those platforms, but that future product work will be Azure-focused. That’s the obvious move here, although it would be interesting to see a cloud provider buy a multi-cloud company, keep it that way, and turn a profit on usage of someone else’s platform.
2. HPC is a big market, somewhere between $20 billion and $36 billion in 2016, depending on the analyst firm providing the estimate. According to Intersect360, spending on cloud HPC resources was $783 million last year—although, not surprisingly, that’s also the fastest-growing segment of HPC spending according to the analyst firm. I’ll assume that’s correlated with the 19.2 percent drop in “departmental” HPC server sales in 2016—to $3.1 billion from $3.8 billion—according to Hyperion Research
Essentially, Cycle gives Microsoft a better opportunity to capture lots of workloads from teams that have high-performance workloads but can’t justify the expense of spending hundreds of thousands of dollars on HPC systems.
3. I think that deep learning workloads will become an increasingly big part of the revenue base for Cycle Computing inside Microsoft—and perhaps are a big reason why Microsoft (which is now “AI-first”) bought the company. Microsoft suggests this in its blog post, stating: “We’ve already seen explosive growth on Azure in the areas of artificial intelligence, the Internet of Things and deep learning. As customers continue to look for faster, more efficient ways to run their workloads, Cycle Computing’s depth and expertise around massively scalable applications make them a great fit to join our Microsoft team.” 
Running these workloads at scale requires lots of computing and fast networks, which Azure has, but Cycle simplifies the on-boarding and management process. It already works with GPU resources, and I assume future work will include supporting Azure FGPA resources, as well. We’re not talking about hobbyist AI experiments here, but the types of large models that large enterprises and research facilities will probably need to start training if AI catches on like we all expect.
It looks like Andrew Ng is starting an AI investment fund
Speaking of AI and deep learning, it looks like one of Andrew Ng’s next ventures (I wrote yesterday about his new deeplearning.ai education effort) could be a venture capital fund focused on AI. PE Hub highlighted an SEC filing by Ng for a $150 million fund, aptly named “AI Fund.” 
Some of the details here are subject to change, but this makes sense. Ng has some pretty firm ideas about the future of AI, and has played a role in its rise both in the U.S. and China, so he’s in as good a position as anybody to identify AI startups that could actually make a difference and grow into large companies. It will be interesting to get the full picture on this once more details are available.
For about the 800th time, I’ll point to my February podcast with Ng (back when he was with Baidu) for more insight into how he thinks about this space.

Sponsor: Bonsai
Sponsor: Bonsai
Artificial intelligence
The research organization has already spun out two companies, one of which (Kitt.ai) was acquired and one of which (Xnor) raised its first venture capital earlier this year. An incubator is different, of course, but AI2 head Oren Etzioni does have a lot of experience as an entrepreneur.
The headline links to a well-balanced Bloomberg story about China’s advantages, China vs. U.S., etc. And here’s a piece from The Economist stating why China becoming an AI power would not be a good thing. (FWIW, I think this debate needs a lot more nuance.)
This uses machine learning to deliver some of its capabilities, but also will could enable augmented reality, which hasn’t really caught on yet. I’m not sure if that’s a market thing, or if it’s because the tech hasn’t been ready to provide a good UX.
It sounds like Israel is ahead of a lot of countries, including the U.S., in actually putting AI into the field in military operations. There’s a good reminder here is that “intelligence” is sometimes a loaded term, when what we really want is scale—as in monitoring 20 cameras at a time instead of 1.
This clearly is important work for anybody who has suffered slow-loading content online. I think Netflix is also using deep learning to solve the same general thing—adapting bitrate based on network quality, among other things—but an open version would benefit a lot more people.
Sponsor: DigitalOcean
Sponsor: DigitalOcean
Cloud and infrastructure
I’ll skip the politics and stick to the tech issue here, which is that allowing the government to get away with overreaching will spell bad news for cloud providers. They’re technically different from a hosting provider like DreamHost, but lines start to get blurry the further from straight IaaS you get.
This is a timely announcement, given not just the situation with DreamHost, but also new European laws going into effect next year. Hiring an expert to encrypt data and monitor access might not be a bad idea for companies that don’t have that expertise in-house.
Matt Asay with an astute analysis of Docker’s rumored funding round (which I wrote about yesterday, as well). Sales really are a (the?) hard part of open source, especially when you’ve put so much effort into building a community. NOTE: He’s missing three zeroes in that valuation assessment, though—it’s up 300 million, not 300,000.
Another piece by Matt Asay (how does he have time for his day job?) that expands on what I noted yesterday about AWS joining the CNCF. Talk is cheap, so AWS’s container fate will be tied to how it executes.
I linked to news about Packet’s edge-location expansion a while back, but this is a good take from users and analysts on why Packet’s approach to IaaS works for developers and smaller shops.
As usual, Steve Herrod is very thoughtful, this time talking about how to build a high-quality engineering team. The examples from VMware are insightful, and might give other companies something to think about.
As with quantum computers, applications and lack of alternatives will help determine how far this idea goes. Secure communications are one big use case, but what are the others?
This is something that academics love in theory, but I’m no longer certain we’ll ever see in practice. It’s true that smaller clouds could band together to take on the Big 3, but more realistic is that third parties (or OSS) will just abstract away the IaaS layer.
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All things data
And it has an impressive founding team, including some folks behind Heron at Twitter and Pulsar at Yahoo. Looks like the platform marries them with Apache BookKeeper for storage, and Kubernetes for orchestration. 
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As always, Mike Stonebraker is a great interview on the subject of databases. My favorite quote: “I think OLTP will entirely go to main memory for anybody who cares about performance. If you don’t care about performance, then run the database on your wristwatch or whatever.”
The company has had some executive departures over the past several months that raised eyebrows, but things have also been looking up on the product and revenue sides lately. Scott Gnau and Arun Murthy, who was a co-founder, will now run even more of engineering, product and R&D.
New ARCHITECHT Show every Thursday; new AI & Robot Show every Friday!
New ARCHITECHT Show every Thursday; new AI & Robot Show every Friday!
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ARCHITECHT
ARCHITECHT delivers the most interesting news and information about the business impacts of cloud computing, artificial intelligence, and other trends reshaping enterprise IT. Curated by Derrick Harris. Check out the Architecht site at https://architecht.io
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