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Grid 'early adopters' to reap major benefits

Grid computing will take a giant leap in acceptance within the next few years as better technology ups productivity and reduces costs.

PHILADELPHIA -- Companies taking advantage of grid computing will soon see major productivity gains and reduced costs as a result of the technology, according to new data from the Economic Strategy Institute (ESI).

Robert B. Cohen, a fellow with the Washington, DC-based institute, said that as costs go down, these early adopter firms will be able to reduce the price of their products, which will result in increased sales and a significant competitive advantage over their less dynamic competition.

It's like a kind of survival of the fittest and the early adopters become the fittest.
Robert B. Cohen
FellowEconomic Strategy Institute

In addition, said Cohen, who presented the ESI data at this week's Gt'04 grid computing conference, early adopters will attract more investment and find more opportunities to expand their business.

"Early adopters gain key advantages that are then reinforced by adding more operating efficiencies," Cohen told the audience. "It's like a kind of survival of the fittest and the early adopters become the fittest."

The ESI came up with its forecasting data by interviewing grid computing users in several industries, including financial services, pharmaceuticals, hospitals, automotive and aerospace. Interviewees were asked how they expected to benefit from grid clusters, parallel processing and enterprise data grids through 2010.

The information from those interviews was then run through a quantitative model and compared with current economic forecasts for each of those industries that don't take grid computing into account.

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Cohen said that most of the industries represented in the sample can expect productivity gains of roughly 25% over previous forecasts as a result of grid computing. The aerospace industry can expect slightly more modest productivity gains of about 20%.

It is "a pretty dramatic increase over the time period," Cohen said. "But it's not outstripping previous periods when we saw a great amount of productivity improvement."

Cohen said grid computing will deliver the greatest cost savings to the aerospace and hospital industries.

Computer companies will see the greatest increases in terms of sales, Cohen said. The ESI forecasts that the computer industry will see a 36% gain in sales over previous forecast levels, with 19% of that due to grids.

The automotive industry will increase sales by 20% over forecasted levels, with 12% due to grids, Cohen said. Pharmaceuticals will see 13% gains, with 7% due to grids.

In some areas, companies that implement grid computing will find spending going up, especially broadband access, Cohen said. He predicts that the use of multi-location grids will cause the automotive industry to increase spending on broadband by a factor of five through 2010, while pharmaceutical firms' spending on high speed access will roughly double.

Tom Bishop, chief technology officer of the Austin, Texas-based Vieo and a speaker at the conference, said that while it is true early adopters are benefiting from the grid computing, several obstacles are still slowing the widespread implementation of the technology. The biggest of those problems is in the area of security and, in particular, getting customers and vendors on board with a mutually beneficial security solution.

"The other two challenges are standards and applications architecture," he said.

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