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Think of how either model enables an ecosystem that parallels the rest of the IT industry (both individuals and/or companies). The Fabric approach seems to be an "all your base are belong to us" strategy, placing the developer at the centre of the supply-side of the IT industry ecosystem, whereas the Architect, SysAdmin, DBA, etc. are "taken care of". The demand-side targets only the silo'd application consumer (in the case of SalesForce's AppExchange), but doesn't really target the IT manager that's worried about application integration, data quality, security, etc.
The Instance approach is much more inline with today's industry ecosystem -- it primarily leads to a more efficient (lower lead time) supplier & parts network. There still are independent software vendors. And architects. And sysadmins. And IT Managers that prefer to "trust, but verify" their SLAs. In this world, systems are more "visible", and have much better lead times than the traditional data centre.
In-between these two categories, I might add, are the Cloud "Glue Players" like 3Tera, RightScale, Elastra, etc. that are trying to raise the bar on Infrastructure, adding in configuration management, integration, autonomics, etc.
Which will win? Well, on the public web, developers tend to have a lot of sway, so "Fabric" seems to play well for some crowds, except it represents a severe form of lock-in. In the case where the "locked car trunk" is well upholstered and available in both private & public clouds, such as MIcrosoft's .NET and Azure, I can see success.
But in the enterprise, developers typically have very little sway over data centre investments. They may pick software technology (some of the time), but there are enterprise architects that deal with strategic vendor relations, and there are data centre / operations folks that deal with keeping the lights on, and all three are from very different worlds, with very different assumptions.
Being with Elastra of course, I'm biased, but given my above assumptions, I think both Fabric and Platforms have room to coexist, Fabric slanted towards Silo applications for SMBs and custom-apps for Web shops, with instances (and some kind of "Cloud Glue") being the preferred choice of Enterprises for at least the next 5+ years.
However, my question stands for the 5-10 year time frame. If the ultimate goal from the businesses standpoint is specific functionality at specific service levels (including security, etc.), then why "build you own" if someone offers a perfectly good framework/platform on which to build it.
Now, folks like ELASTRA, Cassatt, 3TERA and others have an opportunity to drive upwards from infrastructure automation into "platforms", but I predict they will have to narrow down their target market to do so. Alternatively, they can remain general, but will become "plumbing" and relatively commoditized if they do.
I just have trouble seeing a CIO agree that hiring an entire data center staff beats just hiring a developer to write functionality on an infrastructure that someone else worries about--with the caveat that ALL of the CIOs biggest concerns would have to be met before PaaS would be selected. No PaaS platform is there today, but I'm pretty sure that if the money is there, there will be several that target specific business uses in the mid to long term.
Regarding IAAS, I guess it will be more of a decision that will be more affected by financial considerations more than any other factor. It may just be me but I see IaaS players creeping features into their products that somehow mirror something like PaaS in the long run. [Gray]
Best.