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Cloud computing companies offer new services, architecture

Cloud computing is a disruptive force in computing, akin to the revolution ushered in by the Internet. The big vendors are dumping billions into new services and architecture.

LAS VEGAS -- Google Inc., Microsoft, Yahoo Inc. and a handful of other vendors will invest about $5 billion this year to build out the infrastructure to sell IT through the "cloud," according to Gartner Inc. By 2009, these cloud computing companies will have invested billions of dollars more.

What does that have to do with CIOs?

Plenty, according to the Stamford, Conn.-based consultancy. Cloud computing might be this year's annoying buzzword, but CIOs cannot afford to swat it away.

"It is not about the label," said Gartner analyst Tom Austin, speaking to a packed room of IT executives at the Gartner Symposium/ITxpo on emerging trends last week. It's about cost, efficiency, capacity, software upgrades, maybe even better security, Austin said.

What is cloud computing? The conventional wisdom is that cloud computing is about the delivery of IT services over Internet pipes at dramatically lower cost, with massive elasticity and scalability, Austin said. Software as a Service, open source, Web 2.0, the consumerization of technology, globalization -- yesteryear's buzzwords -- are a piece of the story, but cloud computing is bigger than the sum of its pieces, he said.

Like the Internet itself, cloud computing is not an incremental change but an "unstoppable force," Austin said. Disruptive, like the PC; revolutionary, like networking, the cloud will change the way companies buy and use technology, experts say. Cloud computing is not just about accessing applications like SharePoint online from Microsoft, for example, or Google Apps. Storage as a Service will come through the cloud. Users and vendors will shop a multi-layered cloud for infrastructure, business processes, for the world's information.

Think Ziggy, Austin said, the cartoon character who traveled with a dark cloud overhead, no matter what the weather. "The cloud is going to follow you everywhere."


A useful analogy for cloud computing, Austin said, is RAID, redundant arrays of inexpensive disks. When the first patents for this revolutionary concept were filed by IBM in 1977, the focus was on performance, not cost. Ten years later it became apparent that an array of consumer-grade "crap disks" could deliver better reliability and performance than standalone disks at dramatically lower costs. So much cheaper, in fact, that when enough parts failed, the array was "pushed out the back door" and dumped.

Austin said Google's cloud operating system rests on similar hardware architecture of throwaway components lashed together for maximum processing and minimum monitoring -- all under the control of a "single executive" software.

Price is the primary driver behind cloud computing but not the price model of outsourcing, Austin said. Outsourcing is premised on being able to deliver what IT departments would do anyway in their own data centers, but more efficiently, at less cost and at a profit to the outsourcing provider.

The computing power of Google represents an "entirely new breed of computing," he said. Just take email. Gartner calculates that companies spend between $10 and $100 a month per user on email. Companies following "best in class" practices in the care and tending of email spend an additional $10 per gigabyte of storage.

Google provides email from the cloud for tens of millions of people in a complete "lights out" model for $1 to $5 per user a month. Microsoft will follow, Austin said.

Where are cloud computing companies?

Cloud computing is also not to be confused with the "network is the computer" vision. The cloud will support a client model but not the traditional model, Austin said. "This is not the dumb terminal," where everything you need is up and running in the cloud. The revolutionary model is where code and content will be dynamically cached and propagated to any number of devices as needed, he said, so users can work online and offline from many locations.

Google is "years ahead of anybody else playing in this space," Austin said, assessing cloud computing companies. And, "surprise," IBM is close in terms of knowing what to do.

There are rumors out of Microsoft labs about an operating system called Dryad, but it is not clear if it is just smoke or the next coming of Cairo, Austin said, referring to the code name of a project at Microsoft from 1991 to 1996 for next-generation operating systems that was never built. True, Microsoft Exchange and SharePoint can be accessed through the cloud now, but they run on top of a modified version of Windows server, Austin said, rather than on new-generation cloud computing architectures.

IBM and Microsoft are trying to adapt to the new computing paradigm. IBM, the king of customization for the world's largest companies, is "breaking ranks" with itself, unveiling what it's doing in its labs. IBM likes to point out that it's No. 1 in portals, "and they are," Austin said. IBM's Lotus Connections is "way ahead" of other offerings in social software, he said, but the "bad news is they are No. 2 and No. 1 is open source."

Microsoft makes its claim as No. 1 in email and calendaring. Office, no matter what the courts say, is a monopoly, Austin said. The growth of SharePoint is nothing short of astounding, he said, akin to the contagious growth enjoyed by Lotus Notes in 1994.

They tell us they are going to use it as a brick bat to beat up Microsoft or IBM to lower the cost of their customer apps.

Tom Austin, analyst, Gartner Inc.

But the remediation is "going to fall a day late and a dollar short for these guys," Austin said. As IBM has gotten better and better at selling custom applications to its largest accounts, it also has become more reliant on a smaller and smaller number of big clients, rather than cultivating smaller companies and young users.

As for Google, its strengths are apparent and its weaknesses are almost irrelevant. Gartner doesn't see any companies signing up for Google Apps Premier Edition, but it is seeing 20% to 30% of its clients using Google Apps at least once a day, in addition to whatever standard package they use, usually Microsoft. If 80% start augmenting Office with Google Apps, that would be bad for Microsoft, because companies would be less likely to upgrade to a new version. Indeed, he said Google poses a "mortal" threat to Microsoft, as Microsoft did to Netscape.

If 400 million people end up using Google Apps part of the time, that could also hurt Google, Austin said, but he believes the company is "willing to eat that cost," if only to keep Microsoft out of its core business: search advertising.

Michael Ruhrdanz, director of communications and operations, Information Services at University of Nebraska-Lincoln, said the talk was a "great opportunity to see what is coming down the road." He said his university's IT services are highly decentralized. Centralized IT services use Lotus Notes for email, but professors and staff are free to use providers of their choice. The university is looking at the possibility of outsourcing student email to Microsoft or Google to save money. "The biggest concerns are things like data privacy, and that is no different from most companies," Ruhrdanz said. Storing university data in a country that does not follow U.S. guidelines could cause big problems for researchers.

How can CIOs exploit the new paradigm? "We hear from clients all the time, that users are using Google Apps for some things. They tell us they are going to use it as a brick bat to beat up Microsoft or IBM to lower the cost of their customer apps," Austin said.

Let us know what you think about the story; email Linda Tucci, Senior News Writer.

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