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Update on Cloud Computing

July 1, 2009


I posted my first blog about cloud computing in early 2008 and have occasionally followed the subject since. Cloud computing proponents claim that the future belongs to this concept because no other arrangement will be able to handle the enormous amounts of data that businesses will want and need. As the attached illustration from BusinessWeek shows, cloud computing will place the data businesses depend on at their fingertips. As some of my earlier posts indicate, IBM has staked a portion of its future on the success of cloud computing and IBM’s backing is generally enough to make something successful [“I.B.M. to Help Clients Fight Cost and Complexity,” by Steve Lohr, New York Times, 14 June 2009]. Lohr writes:

“In 2000, the Linux operating system was a hot technology, but it had not spread much beyond scientists, researchers and computer programmers. Then I.B.M. declared that it would back Linux with investment, research and marketing, and the technology moved swiftly into the corporate mainstream. The same thing happened with the personal computer in the early 1980s, when I.B.M. endorsed that upstart technology and entered the market. Starting [in June 2009], I.B.M. is returning to the same playbook, introducing some initial products and services and a roadmap for its stable of corporate and government customers to comfortably embrace cloud computing.”

Lohr notes that cloud computing “has the potential to cut the costs, complexity and headaches of technology for companies and government agencies.” That’s why a number of companies, including Amazon.com, Google, Qualcom, Nokia, and Salesforce.com, have also begun offering cloud-based services such as e-mail, computer storage and customer management software. Lohr notes that IBM’s support of cloud computing may make it a staple of the IT world, but it won’t necessarily mean that IBM will be the major beneficiary of cloud computing’s success.

“Even if I.B.M. succeeds in its bid to make cloud computing more palatable for big corporations, there is no guarantee that it will be the main beneficiary of the trend. After I.B.M. helped create the PC industry, lower-cost competitors ended up dominating the business.”

BusinessWeek columnist Steve Hamm asserts that Bill Gates first envisioned cloud computing back in 1990, although he didn’t call it cloud computing [“Cloud Computing’s Big Bang for Business,” 15 June 2009 print issue]. Lohr writes:

“Only now is Gates’ grand vision finally becoming a reality for businesses. While pieces of what he had in mind have been available for years, they typically were expensive and difficult to set up and use. Now that more personal PC is here in the form of smartphones and mini-laptops, and broadband wireless networks make it possible for people to be connected almost anytime and anywhere. At the same time, we’re seeing the rise of cloud computing, the vast array of interconnected machines managing the data and software that used to run on PCs. This combination of mobile and cloud technologies is shaping up to be one of most significant advances in the computing universe in decades.”

Even though many analysts believe cloud computing may be the next big thing, Lohr indicates that many companies aren’t sure what to make of it.

“Many businesses are struggling to understand what this shift means for them. They’re feeling their way forward, trying to figure out how best to take advantage of it. … There are experiments popping up all over that offer lessons for other businesses. Serena Software has switched almost entirely to cloud services, even using Facebook as its main source of internal communications. Genentech has made medical experts available to sales reps in the field with a couple of button clicks. Coca-Cola Enterprises is equipping 40,000 mobile workers, including truck drivers, merchandisers, and sales staff, with portable devices so they’re better connected to the home office while on the road. They can alert their bosses instantly about shifts in demand or problems they encounter. Such examples suggest the possibilities ahead for using these technologies to remake sales, distribution, and other parts of business. It won’t be easy for companies to make good on the opportunities. There is still a great deal of work to be done to get all these technologies functioning seamlessly and reliably. Tech companies have shifted a lot of the software applications that businesses typically handle for themselves over to the cloud, but many more have yet to be switched over.”

Lohr also raises questions of security and reliability. He notes, for example, that “on May 14, an outage at Google left many customers unable to use its online applications.” BusinessWeek‘s Stephen H. Wildstrom also wonders about security and reliability [“What to Entrust to the Cloud,” 6 April 2009 print issue].

“There are two kinds of risks in putting your data online. One is that you can never be quite sure who has access to your information once it has migrated beyond the hard drives and backup storage devices in your home. The other risk is that the information, and sometimes the applications you need to make use of it, may be available only when you are connected to the Internet and the service is up and running.”

He also points to the Google outage as an example of what could go wrong. He urges caution and concludes that “ultimately, putting your data in the cloud involves choosing convenience and productivity at the cost of some security risk. In the real world, convenience almost always wins, and there’s nothing wrong with that. What’s important is that you understand the dangers.”


Although cloud computing’s future looks bright, there are a number of issues that must be resolved for it to really take off. The biggest issue is standards [“Clash of the clouds,” The Economist, 4 April 2009].

“Cloud computing may be the next big thing, but its politics are as old as the mainframe. Geeks from the early years of the information-technology (IT) industry would have had no difficulty deconstructing a quarrel that has broken out among IT’s modern giants. At issue is an ‘Open Cloud Manifesto’, which was published on March 30th. Even before that date, accusations were flying around online. What caused the controversy was not so much the content, which is vague enough for almost everyone to agree with it. The ‘manifesto’ essentially calls for computing firms not to fall back on bad old habits by trying to lock in customers as computing becomes a utility, generated somewhere on the network (‘in the cloud’) and supplied as a service. Since there will be many different computing clouds, the manifesto points out, customers should be able to move their data and applications easily from one to another, and “open” standards, not controlled by one company, should be used whenever possible.”

The Economist notes that such “clashes” should be expected in these early development days of cloud computing. After all, “the industry has still not even settled on a definition of cloud computing.” Noting that there are a lot a technical issues yet to be resolved, the article continues:

“Agreeing on principles for openness and perhaps even standards at this stage would benefit some firms and hurt others. It would create opportunities for latecomers and for new start-ups, and make life easier for firms who help companies stitch together their IT systems. But it would also rein in those firms that have already built cloud-computing businesses, often using proprietary technologies developed to solve particular problems. Arguably, nailing everything down too early may also hamper innovation.”

The magazine notes that since the “manifesto” was published “things have … calmed down a bit.” The article concludes, however, that “if history is any guide the controversy is sure to flare up again once cloud computing really takes off. There could even be an all-out standards war. But the row has at least ensured that the question of openness in the cloud has received a lot of attention.” There is an interesting environmental sidebar to all this talk about cloud computing. Individual companies may reduce their power bills as they switch to using cloud computing providers; but providers themselves face enormous power bills maintaining server farms as well as environmental questions about the impact of large computer storage facilities. One country that hopes to cash in on the move to cloud computing is Greenland [“Warming up to Greenland,” by Christopher Power, BusinessWeek, 15 June 2009 print issue]. Power writes that Greenland “has an abundance of swift rivers [and] the potential for cheap hydroelectric power is huge. Alcoa is now looking into locating an aluminum smelter on the island. Computer storage companies may follow. ‘They can keep their server farms cool with cheap hydropower, and we have more broadband than we can use,’ says self-government director Mininnguac Kleist.” Other emerging market countries with the potential to produce power using renewable resources may want to position themselves to join the cloud computing revolution as well.

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