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Inside the Cloud
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Tech Correspondent
First there was the dot-com boom – now there’s the cloud explosion.
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John Block | Botanica | Getty Images |
], Google [GOOG
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], Facebook, Twitter – across the tech landscape, it seems every titan’s got a cloud strategy; every hot startup has a cloud angle. But what is the cloud?
Think of it as doing for computing what power plants did for electricity. Most of us don’t buy generators anymore – we pay a utility to deliver the juice more efficiently.
In tech, a few big players including VMware [VMW
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], Intel [INTC
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] and EMC [EMC
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] are using ideas like virtualization, multi-core processors and storage-area networking to turn computing power into a utility. That’s shifting the focus away from selling beefy hardware and software and toward selling services, which are often delivered through a web browser or a smartphone app.
The pitch: Customers won’t have to keep spending millions on servers, software licenses, and IT staff to maintain it all. Instead? Just pay a subscription fee.
The cloud revolution is already shaking up tech business models – and software-as-a-service is one of the leading cloud categories. Trend-setter Salesforce.com has a $14 billion – and there are a lot of smaller players eager to grow. They include names like NetSuite, SuccessFactors and Taleo. But trade carefully: the cloud may be the flavor of the month, but profits are hard to come by.
Software tends to get all the attention when it comes to cloud computing – but even in the cloud, those programs have to run on something.
That means a shakeup in the hardware and hosting world that mirrors what’s happening in software. Data center providers like Rackspace, SAAVIS and Terremark are remaking themselves as cloud enablers, offering customers pay-as-you-go access to servers and storage.
Are these infrastructure players worth a look? On the positive side, this isn't just a commodity game. The sharpest operators can charge a premium for attentive customer service, cutting-edge platforms and reliability guarantees. On the negative side, when things go wrong? Ouch. Some of the costs here include real estate and electricity, and when there's an outage, the hosting providers have to pay customers for the downtime.
Questions? Comments? And you can follow Jon Fortt on Twitter @jonfortt
Data is a real-time snapshot *Data is delayed at least 15 minutes
