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"We are moving to an assumption that more and more IT assets will be supplied as a utility over the network," said Nicholas Carr, an author and keynote speaker. "This will represent big new challenges and opportunities [because it will lower] the whole cost base of computing," he said.
Carr said cloud services can effectively create a global supercomputer that can be shared in ways similar to the Internet today. "Figuring out how to harness this world-wide computer may be the big enterprise for this century," he said.
"The price of computing will go way, way down and accessibility of computing will go way, way up," Carr added. "That will force companies to re-think how they build their products and connect with customers," he added.
The big promise of cloud computing is it may unleash new innovations just the creation of the electric utility grid did a century ago, said Carr whose 2008 book "The Big Switch" compared the two trends.
The electric grid spawned "a complete re-thinking of manufacturing and the creation of the assembly line," he said. It also "created an explosion of home appliances and a re-thinking of media as broadcasting and cheap media devices moved into the home," he added.
As companies reduce their spending on IT equipment and staff they free up money for other innovations that can't be predicted today, he said.
Finding money in the clouds
The movement to cloud services has already started. Companies spent $16.2 billion on cloud services in 2008, a figure that will rise to $42.3 billion by 2012, according to International Data Corp., host of the Directions event.Other sources suggest leading cloud services vendors such as Amazon.com are seeing only a small fraction of that level of business. Even if the IDC numbers are accurate, they represent a shift from four to nine percent of total IT spending on cloud services in the next few years—a drop in the bucket.
However, Frank Gens, a senior IDC analyst following the area said cloud services will make up as much as 25 percent of the new growth in IT spending by 2012. The sector is one of the few expected to grow through the current recession as companies buy time on the data centers of providers including Google and Microsoft rather than pay for new hardware themselves.
"The idea of service delivery through the cloud is of very high interest in the market right now," said Gens.
Companies and services such as Bechtel, ESPN, Facebook, Hulu, NASDAQ and Photobucket are already using cloud services. According to a panel of 244 users surveyed by IDC, about 15 percent of companies use the cloud services now and 30 percent said they will use them in three years.
The impact on today's top computer companies is unclear. Current leaders in the trend include Amazon, Google and a handful of smaller companies. Computer giants such as IBM and Hewlett-Packard have struck partnerships, mainly to research the area.
"Big companies are making investments in cloud computing, but they haven't figured out how to make money from it," said Carr. "In the next five years or so we will see even greater economic disruption of the IT business and it will interesting to see which of the big guys can make the switch to the new world," he added.
"It requires a totally new way to think about our offerings and who the customers are," said Gens.
Users want vendors that provide performance"level assurances for their cloud services and make it easy to move applications back and forth from in-house to cloud-based systems as needed, according to the IDC survey.
Although a proponent of the shift, Carr was quick to admit there are many threats and unknowns challenging the rise of cloud computing.
"The hype has probably gotten a bit ahead of the opportunity," he said, citing lack of security, reliability, connectivity and standards for data portability as top hurdles. "It will go through a probably quite long process of change," he added.
A group of Berkeley academics recently released a report on the promises and challenges of cloud computing, calling for standard APIs.
Any reports of failures or attacks on cloud services, data centers or Internet exchanges "would push people back into the build it and run it yourself mode," Carr said.
It's unclear whether many cloud services suppliers will emerge or only a handful from companies with the cash to spend on large data centers.
"Google and Microsoft and investing billions in building out this infrastructure, so the barriers to entry are huge," he said. "If things go in that direction I think you will see governments move in and take an aggressive role" as regulators, he added.
Emerging markets are another wild card. Cloud services could help them bridge huge digital divides in computer haves and have-nots, but to date they are lagging due to the lack of infrastructure to support broadband networks linked to large distributed data centers, Carr said.
-----------------------------BY Rick Merritt
Source：EETimes
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