Saturday, June 16, 2012

(BN) AT&T, Behind Amazon in Cloud, Turns to Hackathons: Tech

Bloomberg News, sent from my iPad.

AT&T, Behind Amazon in Cloud, Turns to Hackathons: Tech

June 12 (Bloomberg) -- When Pritesh Damani stumbled upon a hackathon for application developers in New York last month, he was surprised to discover that the event was using AT&T Inc.'s cloud technology to host the contestants' apps.

Damani, like startup engineers across the country, sees Inc.'s Web services as the dominant choice for software and Web developers looking to outsource their data- center needs. After winning the event by creating a mobile app for fantasy sports, Damani is using AT&T's infrastructure to help build a company around his product.

"I didn't even know that it existed," said Damani, 30, referring to AT&T Cloud Architect, which was introduced in January to provide hosting services via the Internet to small businesses and developer teams. "It turns out their stuff is equally simple, if not simpler."

Getting that message across to emerging startups is no easy task for AT&T. Amazon has a six-year head start, while Rackspace Hosting Inc. is growing rapidly and Microsoft Corp. and Google Inc. are trying to catch up. AT&T, the largest U.S. phone company, is counting on its nationwide wireless network, experience with large data centers and established relationship with Apple Inc. to lure developers away from competitors.

The cloud-services market, where companies can pay pennies an hour to have their apps and websites hosted rather than buying and managing their own servers, is expected to almost triple to $10.5 billion in 2014 from $3.7 billion last year, according to researcher Gartner Inc.

Revenue Stream

Cloud represents a new potential revenue stream for AT&T after a 6.6 percent increase in sales over the past four years to $126.7 billion in 2011. The company is seeking ways to make up for slower subscriber growth in the saturated mobile-services business, which accounts for 45 percent of revenue.

To gain a footing, AT&T has to first make startups aware it has a product. The Dallas-based company is sponsoring hackathons across the country, where it can show off its service and offer promotions, including a complimentary first month.

Hackathons, also called codefests, typically last a day or two and bring together teams of developers and designers, who often work around-the-clock, building applications tied to a particular theme.

In addition to the New York hackathon, which was part of last month's TechCrunch Disrupt conference, AT&T has more than 15 events lined up the rest of this year in cities ranging from Los Angeles and Palo Alto, California, to Denver and Toronto.

'Different Game'

"We recognize it's a different game we're playing and there are a different set of rules," said John Potter, a vice president in AT&T's business solutions unit, in Bedminster, New Jersey. "We're looking to get people engaged and understand what Cloud Architect is, put promotions out there and get a certain percentage of promotional users flipped to real users."

For winning the New York contest, Damani got $5,000 along with a free month of service. His app, Fantasy Buzzer, is designed to alert players of fantasy football and baseball games when their team has injuries, and let them make changes with just a couple of clicks.

AT&T introduced Cloud Architect in January at the Consumer Electronics Show in Las Vegas. There, it finalized a partnership with SoftLayer Technologies Inc., a seven-year-old company also based in Dallas that provides data-center technology and services. AT&T is adding services on top of SoftLayer's servers and using its sales and marketing teams to promote the product.

Balancing Needs

The carrier isn't concentrating solely on the startup market. For big companies, AT&T has a partnership with VMware Inc., whose virtualization software lets businesses create a cloud in their own data center, ensuring greater privacy and control.

"Long-term, you'll see a mix of architectures within our portfolio," said Steven Caniano, AT&T's vice president of hosting, application and cloud services, at a conference on May 31. "We'll be able to balance based on customer needs in terms of functionality, price point, service level, the best solution set to meet their particular work load."

For smaller companies and app developers, Cloud Architect starts at $50 a month, or customers can pay by hour of usage, similar to how Amazon's service is priced. AT&T is touting its ability to provide networking, security and storage via the cloud, using its experience offering those services to large companies across the country.

As a mobile operator, it's also letting developers access the company's APIs, or application programming interfaces, to build apps that utilize location services and messaging technologies.

Amazon Loyalty

Going head-to-head with Amazon presents a new challenge. The online retailer leads the cloud market with revenue estimated to be about $1 billion. Hundreds of thousands of companies in 190 countries use Amazon's service, and the company is located in Seattle, one of the top U.S. tech hubs.

While AT&T is known as an old phone behemoth, Amazon has the loyalty of emerging startups that have used its Web services from the beginning, like Euclid Inc. Founder Will Smith's Palo Alto-based startup hosted a tech talk in May where Amazon executives spoke to about 10 local companies, and Smith said he doesn't see AT&T cracking the developer community. That's because Amazon continues adding new features and dropping prices as the cost of online storage declines.

"Every two weeks, I get an e-mail about how the costs are going down," said Smith, whose company provides analytics technology to retailers. Amazon is "incredibly easy to work with and their product is so seamless," he said.

Success Stories

To Potter, that sentiment just signifies how much work his group has to do. At a recent mobile hackathon in Seattle, AT&T attracted more than 130 developers for an information session on development in the wireless industry.

The winner of the event was RaaSIO, a team of engineers building robots that can be controlled by smartphones. AT&T's cloud works for them, because it has the right technology to collect data from wireless devices and communicate commands to the cloud and back. The founders now promote the service when they pitch their project, which means the word-of-mouth trick is starting to work, said Shubham Shukla, a RaaSIO team member.

"They need some more success stories to push Cloud Architect to the developer community," he said.

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