Bits Blog: Open vs. Closed: The Cloud Wars

Left: Susana Bates/Reuters; Peter DaSilva for The New York Times Oracle, run by Larry Ellison, left, is facing a challenge from start-ups like Aaron Levie’s company, Box.

For all the freedom promised by cloud computing, businesses may be really looking at less choice and more constraint than ever before. Whether that happens is the technology industry’s next great battleground.

On one side are large incumbent tech providers like Oracle and Hewlett-Packard, who already have broad portfolios of technology and deep corporate relationships after years of selling products. On the other are younger companies, whose products and services were built for cloud computing and thus may offer more innovative approaches.

At its recent annual customer showcase, Oracle’s chief executive, Larry Ellison, made much of his company’s “engineered systems” approach to cloud computing, a merger of hardware and software that he argued enables faster performance and better security. Oracle, which has been around for three decades, also guarantees fast service response times to customers who buy the full Oracle “stack,” a term covering everything from computing’s most elemental hardware to its most advanced software applications, instead of competing products. Buy from many, Oracle says, and you won’t get the same service.

Similarly, Hewlett-Packard will soon introduce business printers capable of scanning and storing information in the cloud. This data can be analyzed too, but only if you use Hewlett-Packard’s cloud systems. H.P. is also offering cloud computing systems in “pods” that combine its servers, data storage, and management software in a single integrated package.

On the other side, the cloud storage company Box announced Tuesday a service that enables customers of several specialized cloud software companies to share their data broadly among these companies. The idea is that customers of SugarCRM, a maker of sales management software, could collaborate internally and externally (with permissions and controls) by sharing select data onto the software of Jive Software, which is used in corporate communications. Others in the partnership include Concur, Cornerstone OnDemand, DocuSign, Eloqua, FuzeBox, NetSuite, Zendesk – and Oracle, but probably just for its databases, which are used widely in the cloud.

If Oracle and H.P. are offering a vertical integration, Box is trying to sell a horizontal integration of diverse software applications, which would provide customers more choice.

“It will enable a bigger shift to ‘best of breed’ solutions,” said Aaron Levie, chief executive of Box. “Larry’s position is ‘Just buy Oracle.’ This is dramatically opposed to having everything on one stack.”

The “single stack” approach falls into a traditional business of offering better service and more features if you buy from a single source. It is known as “lock in,” in which there is a very high cost in time, energy and data in moving off a single provider. Consumers see it in things like Apple’s iTunes, which is hard to merge with other online music systems while retaining the same quality of service.

Businesses tend to complain about lock in, because prices can creep up once the lock is on. But they like it, too, as it eases the complexity from choosing and servicing a corporate system. The informal term for having a sole vendor is “a single throat to choke,” and that is considered a good thing.

The single throat approach makes it hard for new companies to break in, and for unforeseen innovation to take place, however. Cloud companies selling to business have tried to get around this by offering services that can be easily purchased and used over the Internet by anyone. Amazon Web Services, for example, has been able to sell computing and storage to engineers all over a company without ever knocking on the chief information officer’s door. So did social networking company Yammer, which was so successful that it was acquired by Microsoft.

Whichever approach, the vertical stack or the horizontal choice, comes to dominate, it’s likely that much of the early experimentation will give way to alliances and uniform approaches as corporations move to cloud computing.

“You’re crazy if you think you’ll never have to sell to a C.I.O. now,” Mr. Levie said. As the cloud takes over more of business computing, the information managers “have to be supported in security, compliance and regulatory functions,” he said. “You’ll see the competition between vertical stacks and best-of-breed horizontal solutions.”

It’s hard to say what makes things “best,” however. One hazard in Mr. Levie’s approach is the different look and feel of all of these independent cloud providers. Even if they work better, it’s tiring for the average worker to move in and out of different Web designs all day.

Design, as much as actual performance, could be the deciding factor in this competition.

Foxconn Plant in China Closed After Worker Riot

A spokesman said some people had been hurt and detained by the police after the disturbance escalated into a riot involving more than 1,000 workers late Sunday.

The company said the incident was confined to an employee dormitory and “no production facilities or equipment have been affected.” It said the cause of the disturbance was still under investigation.

One Foxconn employee reached by telephone Monday afternoon, however, said the incident began when workers started brawling with security guards.

Unconfirmed photographs and video circulated on social networking sites, purporting to be from the factory, showed smashed windows, riot police officers and large groups of workers milling around. The Foxconn plant, in the Chinese city of Taiyuan, employs about 79,000 workers.

The Chinese state-run news media said 5,000 police officers had been called in to quell the riot.

A Foxconn spokesman declined to specify whether the Taiyuan plant made products for the Apple iPhone 5, which went on sale last week, but he said it supplied goods to many consumer electronics brands.

An employee at the Taiyuan plant, however, said iPhone components were made there. Most Apple-related production, though, takes place in other parts of China, particularly in the provinces of Sichuan and Henan. Apple could not be reached for comment.

Foxconn said it employs about 1.1 million workers in China.

Labor unrest in Taiyuan, in northern China’s Shanxi province, comes as strikes and other worker protests appear to be increasing in frequency in China this year compared to last year, said Geoffrey Crothall, spokesman for the China Labor Bulletin, a nonprofit advocacy group in Hong Kong seeking collective bargaining and other protections for workers in mainland China.

Many of the protests this year appear to be related to the country’s economic slowdown, as employees demand the payment of overdue wages from financially struggling companies, or insist on compensation when money-losing factories in coastal provinces are closed and moved to lower-cost cities in the interior.   

But the level of labor unrest in China this year has not yet matched 2010, when a surge in inflation sparked a wave of worker demands for higher pay, Mr. Crothall said.   

Mr. Crothall said that while the cause of the latest dispute in Taiyuan remained unclear, his group had found an online video of police there using a megaphone to address “workers from Henan” – the adjacent province to the south of Shanxi. The police officer said that the workers’ concerns would be addressed.    

Disputes involving large groups of migrant workers are common in China. In some cases, workers protest after believing that they have been promised a certain pay package and traveled a long distance to claim it, only to find on arrival that the details are different from what they expected. In other cases, workers from different provinces with different cultural traditions coming together in a single factory have clashed over social issues or perceived slights.

The disturbance is the latest problem to hit Foxconn, which also is a key supplier to Dell, Hewlett-Packard and Microsoft.

Foxconn, which is part of Hon Hai Group of Taiwan, has been struggling to improve labor conditions at its China factories after reports about labor abuse and work safety violations.

Apple and Foxconn have worked together in the last year to improve conditions, raise pay and improve labor standards.

Mr. Crothall said workers in China had become increasingly emboldened.

“They’re more willing to stand up for their rights, to stand up to injustice,” he said, adding that damage to factory buildings and equipment still appeared to be unusual, occurring in fewer than 1 in 20 protests.

The same Taiyuan factory was the site of a brief strike during a pay dispute last March, the Hong Kong news media reported then.

Social media postings suggested that some injuries might have occurred when people were trampled in crowds of protesters.

Foxconn Plant in China Closed After Worker Riot

A spokesman for the company said some people had been hurt and detained by the police after the disturbance escalated into a riot late Sunday. The company said the cause of the disturbance was still under investigation.

One Foxconn employee reached by telephone Monday afternoon, however, said the disturbance had begun when workers started brawling with security guards, and it eventually had led to a huge riot involving more than 1,000 workers. Foxconn said no property had been destroyed or damaged.

Unconfirmed photographs and video circulated on social networking sites, purporting to be from the factory, showed smashed windows, riot police officers and large groups of workers milling around. The Foxconn plant, in the central Chinese city of Taiyuan, employs about 79,000 workers.

The Chinese state-run news media said 5,000 police officers had been called in to quell the riot.

A Foxconn spokesman declined to specify whether the Taiyuan plant made products for the Apple iPhone 5, which went on sale last week, but he said it supplied goods to many consumer electronics brands.

An employee at the Taiyuan plant, however, said iPhone components were made there. Most Apple-related production, though, takes place in other parts of China, particularly in the provinces of Sichuan and Henan. Apple could not be reached for comment.

Foxconn said it employs about 1.1 million workers in China.

The disturbance is the latest problem to hit Foxconn, a key supplier of products to Apple and other global electronics companies, including Dell, Hewlett-Packard and Microsoft.

Foxconn, which is part of Hon Hai Group of Taiwan, has been struggling to improve labor conditions at its China factories after reports about labor abuse and work safety violations.

Apple and Foxconn have worked together in the last year to improve conditions, raise pay and improve labor standards.

Disturbances at factories have become increasingly common in China, rights groups say, as laborers have begun to demand higher pay and better conditions.

Geoffrey Crothall, spokesman for the China Labor Bulletin, a nonprofit advocacy group in Hong Kong seeking collective bargaining and other protections for workers in mainland China, said workers in China had become increasingly emboldened.

“They’re more willing to stand up for their rights, to stand up to injustice,” he said, adding that damage to factory buildings and equipment still appeared to be unusual, occurring in fewer than 1 in 20 protests.

The same Taiyuan factory was the site of a brief strike during a pay dispute last March, the Hong Kong news media reported then.

Social media postings suggested that some injuries might have occurred when people were trampled in crowds of protesters.

Foxconn Factory in Taiyuan, China, Is Closed After Worker Riot

The company said several people were hospitalized and detained by the police after the disturbance, which occurred late Sunday, escalated into a riot.

Unconfirmed photographs and video that was circulated on social networking sites purporting to be from the factory showed smashed windows, riot police and large groups of workers milling about. The Foxconn plant, in the city of Taiyuan, in central China, employs about 79,000 workers.

A Foxconn spokesman declined to specify whether the Taiyuan facility made products for the Apple iPhone 5, which went on sale last week, but he said that it supplied goods to many consumer electronics brands. Foxconn said it employed about 1.1 million workers in China.

The disturbance is the latest to hit Foxconn, a key supplier of products to Apple and other global electronics companies, including Hewlett-Packard, Dell and Microsoft.

Foxconn, which is part of the Hon Hai Group of Taiwan, has been struggling to improve labor conditions at its China factories following reports about labor abuse and work safety violations.

Apple and Foxconn have worked together in the last year to improve conditions, raise pay and improve labor standards.

Disturbances at factories have become increasingly common in China, rights groups say, as laborers have begun to demand higher pay and better conditions.

Geoffrey Crothall, spokesman for the China Labor Bulletin, a nonprofit advocacy group in Hong Kong seeking collective bargaining and other protections for workers in mainland China, said workers in China had become increasingly emboldened.

“They’re more willing to stand up for their rights, to stand up to injustice,” he said.

The same Taiyuan factory was the site of a brief strike during a pay dispute last March, Hong Kong media reported then.

Social media postings suggested that some injuries might have occurred when people were trampled in crowds of protesters.