Sunday, 25 April 2010

Cloud Computing: Winners and Losers

I continue to ponder various points about cloud computing that were raised in a session on the subject in which I participated earlier this week. I paid particular attention to the presentation of a senior technical person, with extensive experience in cloud computing at a research lab operated by one of the world's leading high tech companies. His words got me to thinking about who might the winners and losers in a cloud computing-dominated world.

By way of quick summary, let us characterize cloud computing as the provision of various computer-related services where the user makes use of services accessible from a remote site instead of from the user's own IT resources. The underlying idea is that such sevices should be provided as a ultility analagous to electricity and water. While the concept was first floated in the 1960s, it entered the mainstream only in the last decade due to a series of hardware, communication, software and financial considerations. Two aspects are particularly noteworthy.

First, the user need no longer take software licences for which he pays regardless of whether the the software is actually is being used. Instead, under the SaaS model ("software as a service"), the user in principle need only pay for the software services that it actually uses (in actuality, it appears that this is not precisely the case, but the "software on demand" model is close enough for our purposes.) Second, the remote cloud computer centres serve to replace the need to maintain full-scale IT centres on-site. This is done by maintaining immensely large computer centres manned by the most skilled IT personnel, thus enabling the user to tap into these computer centres for a variety of their data services (so-called "platform as a service" and "infrastructure as a service").

Against this backdrop, who might win and who might lose? Permit me to propose the following list.

The Winners

1. Manufacturers of hardware and communications equipment--They will be called upon to provide the computer centres with the necessary equipment to support and expand these facilities.

2. Manufacturers of various hand-held devices--One of the claimed reasons for the recent attractiveness of cloud computing is the explosion of hand-held devices, which in principle permit connectivity anytime, anywhere. The popularity of these devices will be enhanced by the ability of their users to acess usable applications on the fly. The ability of the computer cloud to provide these contents will be a major determinent in how successful this hand-held revolution will actually be.

3. Users--There has long a been a feeling that users of computer software pay for software that in effect rests unused most of the time. When licensing models were based on payment per CPU, or user, or computer station, there was no ready way for users to free themselves from this model. When software is longer stored within one's local IT system, then the possibility is created for users to pay only for the software that they actually use.

4. Owers of the computer centres--It is that is widely attributed with first seeing the commercial possibility of making use of excess capacity in its computer centres to provide storage and access capablities. Whether true or not, it appears that a number of computer-related entities--e.g,,, Google, Microsoft and IBM--will come to dominate the infrastructure for cloud computing.

The Losers

1. Current software licensing models--Pureyors of software licensing may be challenged to find the kind of metric for charging users for the use of their software that will be as lucrative as the current model.

2. In-house IT departments--One of the claims is that local IT departments are both expensive to maintain and too often do not attract the calibre of person required to provide the necessary support. Whether that is true or not, the expansion of cloud computing may lead to a reduction of in-house IT positions.

3. Open source software--By some accounts, cloud-computing will only strengthen the hand of proprietary software, protected by copyright and patent, at the expense of software development under the open source model. Thus, while cloud computing may encourage cooperation at the user level, it does nothing to undermine, and may even strengthen, the hand of the proprietary software industry.

I am certain that there will be additional potential winners and losers in the cloud-computing world. In any event, it will be interesting to see how cloud computing plays out in the years to come.

More on winners and losers here

1 comment:

Fred Logue said...

I think you could equally put the Users in the losers section. Going to the cloud requires you to hand over more control of your data and personal information under a contract that may or may not have adequate protections for you.

One suspects that of all the forces driving the cloud, the benefits for the user rank somewhat behind the likes of the Googles, Microsofts and the IBMs on the priortiy list.

It is still early days so it will be interesting to see if users win, lose or break even with cloud computing.