That is about as brief a history of computers as anyone can make it. The point is that they are much more than devices in a box or in a data centre. Computing has constantly changed shape and location—mainly as a result of new technology, but often also because of shifts in demand.

The first “computers” were indeed people. The word originally meant an individual who solved equations, often using a mechanical calculator. Hundreds of them were employed by big companies that needed to do a lot of number-crunching, such as aeroplane manufacturers. It was only around 1945 that the word came to describe machinery.

But even after that, computing kept undergoing mutations—or, in the jargon, platform shifts. The mainframe, the original computing platform, was dethroned by minicomputers, which in turn gave way to personal computers, which are now being pushed aside by hand-held devices and smartphones. With each step the architecture—the underlying structure of computing—became more distributed.

Now, this special report will argue, computing is taking on yet another new shape. It is becoming more centralised again as some of the activity moves into data centres. But more importantly, it is turning into what has come to be called a “cloud”, or collections of clouds. Computing power will become more and more disembodied and will be consumed where and when it is needed.

The rise of the cloud is more than just another platform shift that gets geeks excited. It will undoubtedly transform the information technology (IT) industry, but it will also profoundly change the way people work and companies operate. It will allow digital technology to penetrate every nook and cranny of the economy and of society, creating some tricky political problems along the way.

Here we go again, you may think. In order to generate new demand, the maturing IT industry keeps creating new buzzwords, often with celestial connotations (“cyberspace”, “blogosphere”), which suggest some kind of technological nirvana. The reality is much more down to earth.

Hype is indeed rampant in “cloud computing”. The term entered into IT-speak only a year ago and has spread voraciously. Cloud conferences and cloud blogs are multiplying almost as quickly as cloud start-ups. Established IT firms are slapping the new label on old gear.

In fact, the cloud craze may have peaked already, if the number of Google searches is any guide (see chart 1). Cloud computing is bound to go through a “trough of disillusionment”, as Gartner, a research firm, calls the phase in the hype cycle when technologies fail to meet expectations and quickly cease to be fashionable. Much still needs to be invented for the computing sky to become truly cloudy.

Yet even if the term is already passé, the cloud itself is here to stay and to grow. It follows naturally from the combination of ever cheaper and more powerful processors with ever faster and more ubiquitous networks. As a result, data centres are becoming factories for computing services on an industrial scale; software is increasingly being delivered as an online service; and wireless networks connect more and more devices to such offerings.

All this allows computing to be disaggregated into components—or “services”, in IT parlance. This is why European technologists such as Lutz Heuser, head of research at SAP, a German software giant, like to refer to it as the “internet of services”. The cloud metaphor seems more apt. The internet is used mainly by people with personal computers and a physical network connection. Cloud applications, on the other hand, will be used by billions of devices of all kinds, many of them untethered, but will be connected to the “internet of things”.

In some ways the cloud is already hanging in the sky, especially for consumers. According to a recent study, 69% of Americans connected to the web use some kind of “cloud service”, including web-based e-mail or online data storage (see chart 2). The best example is Google, the biggest online search company by far, which now offers a plethora of web-based applications such as word-processing or online spreadsheets.

Companies, too, have been moving into the cloud, albeit much more cautiously. Financial institutions in particular have for some time been building “computing grids”. Firms that provide enterprise software as a service (SaaS) over the internet, such as Salesforce.com and NetSuite, have been growing steadily.

In the years to come companies are likely to venture much farther. For one, operators of computing clouds such as Amazon and Google have shown that this is a far more efficient way of running IT systems. Secondly, many firms will find they have no choice. The way in which their IT infrastructure has grown is proving unsustainable. Most corporate data centres today are complex warrens of underused hardware that require more and more people, space and power to keep them going. The current economic malaise will increase the pressure on companies to become more efficient. More has to be done with less, which is cloud computing’s main promise.

Illustration by Matthew Hodson

This special report will chronicle the rise of the cloud and try to predict where it is heading. It will start by looking at the technology. Computing clouds are immensely complex, but can be roughly divided into three layers: infrastructure, applications and the periphery where they meet the real world. These will be discussed in turn. The report will go on to consider the impact the cloud will have on the IT industry and the economy as a whole. The conclusion will look at what might stop the cloud from growing ever thicker: regulation and worries about the safety of both personal and corporate data.

Irving Wladawsky-Berger, a technology visionary at IBM, compares cloud computing to the Cambrian explosion some 500m years ago when the rate of evolution speeded up, in part because the cell had been perfected and standardised, allowing evolution to build more complex organisms. Similarly, argues Mr Wladawsky-Berger, the IT industry spent much of its first few decades developing the basic components of computing. Now that these are essentially standardised, bigger and more diverse systems can emerge. “For computing to reach a higher level”, he says, “its cells had to be commoditised.”

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Today’s Forecast: Cloudy

People are going to be putting their information not into some device but into some service that lives in the sky.

Daniel Lyons

NEWSWEEK

From the magazine issue dated Nov 10, 2008

Scott McNealy of Sun Microsystems used to call it "the big friggin' web-tone switch" ("Web tone" being the digital successor to "ringtone"). IBM dubbed it "on-demand computing." Others have called it "grid computing" and "software as a service." The latest name is "cloud computing," and it's the hot new dance craze—er, tech trend—that's sweeping the computing industry, generating so much hype that Oracle CEO Larry Ellison, speaking at a conference recently, felt moved to bash the whole cloud phenomenon as just a fad. "Maybe I'm an idiot, but I have no idea what anyone is talking about. What is it? It's complete gibberish. It's insane," Ellison said.

OK. Deep breath. Despite Ellison's skepticism, cloud computing makes a lot of sense. The basic idea is simple enough. Instead of storing your data on your PC, you store it on a server on the Internet. You don't know, or care, where that server is located. Your data might, in fact, be scattered across a bunch of different servers. It's just all up in the sky someplace (hence the name "cloud"). But as long as you're connected to the Internet, with enough bandwidth, you can get at your photos and documents and home movies from wherever you happen to be, using any device you want, such as your mobile phone, a laptop, a media player or an Internet kiosk at the airport. "People are going to put their information not into some device, but into some service that lives in the sky," says Paul Maritz, CEO of VMware, whose "virtualization" software provides a key piece of the cloud puzzle. (Among other things, VMware's software lets techies combine hundreds of servers into a giant pool of computer power, so applications run more efficiently.)

Moving to the cloud means no more trying to remember whether you left your expense-report spreadsheet on the PC at work or the MacBook at home. No more backing up everything to a thumb drive and transferring it from one device to another. No more copying all your stuff from your old PC when you buy a new one. It also means you can create a repository of information that stays with you and keeps growing for as long as you're alive.

Pretty much everyone in the tech industry agrees it's the future—including Microsoft, which last week devoted much of its annual conference for developers to a rollout of new cloud technologies and a pep talk about why customers should jump aboard. We're not there yet: Internet connections aren't fast enough, aren't reliable enough, and aren't available at all times in all places. And some early cloud-like services haven't been so great. Apple's offering, called MobileMe, is supposed to keep my calendar, address book and bookmarks synchronized on my iMac, MacBook Pro and iPhone. But it's not as reliable or as easy to use as it should be. Another problem is that everybody seems to be developing a piece of the puzzle, but nobody has brought all the pieces together. The cloud also raises some thorny issues about who controls your data. These will have to be worked out for the cloud to catch on.

Writ large, the idea of cloud computing can be applied to companies. Instead of operating their own data centers, firms might rent computing power and storage from a service provider, paying only for what they use, as they do with electricity. Amazon, best known as an online bookstore, operates a booming cloud business, renting out computing power and storage space to 440,000 developers, with more than 30,000 more signing up each quarter. Some Amazon customers have never built their own data centers—they just use Amazon instead. "We call them serverless companies," says Adam Selipsky, a vice president at Amazon, in Seattle.

Some companies have started using Amazon to run new applications instead of adding on to their data centers. These include Eli Lilly, The New York Times and National Geographic. Ultimately, Amazon hopes companies will migrate existing computing chores out of their own data centers and over to the cloud. The pitch is simple: it's cheaper. For some, a move to the cloud might cut computing costs in half, says Frank Gens, analyst at researcher IDC. Gens estimates spending on cloud computing will boom from $16 billion this year to $42 billion in 2012. "The cloud is really the foundation for the next 20 years of the IT industry," Gens says.

Tech giants see the same thing, which is why they're racing to deliver cloud products. Microsoft is promoting a new set of programs designed to run Web-based applications. It calls the collection Windows Azure and describes it as an "operating system for the cloud." (Calling it an "operating system" is a bit misleading, since, well, it's not really an operating system. Individual users won't see Windows Azure—they'll just use applications that are running on it.) Google, the search giant, serves up Web-based word processing and spreadsheet applications. Even Oracle, despite Ellison's snarky comments, has introduced a cloud-based version of its database program. Others competing in this space include IBM and Cisco.

Service providers won't admit this, but once they've got your data, they'll try to find ways to lock you in and keep you from switching to another provider. Ultimately, we users may have to make a trade-off—sacrificing some degree of freedom and control in exchange for convenience. If the alternative is the mess we have today, that trade-off may look appealing.

URL: http://www.newsweek.com/id/166818

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10 Cloud Computing Predictions

Vendors are rushing to join Amazon, EMC/VMware, IBM, Google, Microsoft, and Salesforce in the cloud, offering businesses new ways to do more with less.

By John Foley,  InformationWeek
Jan. 31, 2009
URL: http://www.informationweek.com/story/showArticle.jhtml?articleID=213000074

The cloud computing market arrived in a big way in 2008, with Amazon, EMC/VMware, IBM, Google, Microsoft, Salesforce.com, and a dozen other vendors introducing products for on-demand, pay-as-you-go computing. What's next? My predictions for 2009:

1

The Cloud Market Grows
Cloud computing growth will exceed 20%. It's an educated guess, not the result of market research, but the main point is the cloud will grow at a healthy clip while enterprise software, hardware, and other IT segments struggle to grow at all. Amazon's nonretail business, which includes Amazon Web Services, grew 45% in the third quarter of 2008, and Salesforce's fiscal third-quarter revenue climbed 43%. Cloud services will appeal to budget-restrained IT departments.

2

Google Remains In A Niche
Google App Engine is an interesting alternative for developers building and deploying Web applications, but it will appeal mainly to startups, Web 2.0 companies, and small businesses. Google Docs (software as a service) and Google App Engine (platform as a service) will win over big companies, but not for the foreseeable future.

3

More Outages, Less Disruption
When Amazon's Simple Storage Service crashed for two hours in February, then for eight hours in July, S3-based Web applications also went down. As more companies sign up for cloud services this year, two things will happen. First, the added workload will cause more cloud failures. And second, cloud users will be better prepared with backup and recovery plans.

4

Big Companies Embrace It
Cloud computing has been popular mostly among smaller companies, but large user organizations will shed their inhibitions and adopt cloud services more aggressively this year. Why? Because they can. Enterprise-class management tools, data-integration technologies, and other prerequisites are becoming available. The promise of cost savings and the ease of subscription-style pricing also will fuel adoption among larger companies.

5

Microsoft Keeps 'Em Waiting
If 2008 was the year Microsoft raised the curtain on its cloud computing strategy, 2009 will be the year it begins to deliver. But don't expect too much. Its Windows Azure cloud operating system and related Azure Platform Services are still in development. We may see some Azure services in the second half of 2009, but 2010 is more realistic for general availability.

6

Cloud Startups Thrive
Cloud management vendor RightScale recently closed a $13 million second round of funding. Venture capital may be drying up around Silicon Valley, but cloud computing startups will be an exception.

7

Real Management Tools Emerge
It may seem like Amazon's Elastic Compute Cloud is the granddaddy of cloud services, but EC2 only became generally available a few months ago, after a long test cycle. Now EC2 management tools are much needed. Amazon has promised EC2 management, monitoring, load-balancing, and auto-scaling tools in early 2009. IBM plans to add cloud management to Tivoli Service Request Manager, Provisioning Manager, and monitoring products. There will be more such examples.

8

We See Public-Private Clouds
IT departments will create public-private hybrid clouds. They'll use virtualization, APIs, and platforms such as Elastra's Cloud Server to devise cloud-like environments in their own data centers that work seamlessly with public cloud services. Work is under way to create a "wrapper" around Google App Engine that lets users deploy App Engine on their own servers.

9

Data Security Worries Return
I keep hearing IT pros are growing comfortable with cloud service providers' data security, that it's as good or better than what most IT departments can provide. Maybe, but it will only take one data breach before the flaw in that argument gets exposed--that consumers and regulators have yet to be convinced the cloud is a secure place for personal data.

10

Oracle Joins The Cloud
Larry Ellison loves to bad-mouth cloud computing, but Oracle's CEO also keeps rolling out cloud-like options. Having watched Salesforce thrive with SaaS, he no doubt sees it and other vendors raise the stakes with platforms as a service that give developers everything to build and run applications in the cloud. And Oracle's database is now available on Amazon's EC2. The obvious next steps: virtual databases and build-it, run-it Web applications, hosted by Oracle.