Michael Sheehan's Blog

While Cloud Computing seemed like the New World in 2007 and the Wild West in 2008, it has now been colonized and settlements established. Cloud Computing is no longer a just a “newfangled” movement but rather an established IT and business strategy that will be critical to all companies regardless of business models.

If you look back to January 2008, the players in Cloud Computing were few are far between. Obviously, Amazon was breaking ground in establishing themselves as the front-runner at that time. But the term was very new and largely undefined.

At the end of March 2008, the search term “Cloud Computing” (according to Google Insight) really started a strong upward trend within World Wide Searches:

As the US (and World Wide) Economy fell off the cliff, so it seems, did the interest in the Cloud (but that could be due to other worldly distractions). What is actually a bit interesting is that just after the Economy went south, there was a big spike in interest in the Cloud…were people thinking it was recession-proof? Perhaps. (”Cloud Computing” is the blue line below and “US Economy” is appropriately red).

Many in the Cloud Computing field have been touting how moving to the Cloud can lower high Capital Expenditures (CapEx) and shift this to Operating Expenditures (OpEx). Coupling that with a pay-for-what-you-use, use-only-what-you-need model, and Cloud Computing becomes a panacea for extending the runway of your business. Prudent companies are slashing budgets and looking to weather the turbulent market for as long as possible. Those companies that are heavily dependent on advertising will be seeing the effects of cash hording in Q1 and Q2 of 2009. Utility-based spending is a shift in mind-set that could potentially slow the freefall and domino effect we are currently experiencing.

Cloud Computing providers are leapfrogging each other with new features and offerings. GoGrid was the first to provide a wide assortment of Windows Server Clouds (Windows Server 2003 at launch and later Windows Server 2008). Towards the end of the year, Amazon’s EC2 announced the availability of Windows Server 2003. Microsoft jumped into the ring as a Cloud Platform with Azure. By far, AWS is leading the field by offering a wide array of Cloud services (EC2 – Cloud Infrastructure/ S3, SimpleDB, CloudFront, & SQS – Cloud Extenders). Their footprint continues to deepen as well. But sometimes it’s not bad being #2. GoGrid is a Cloud Infrastructure provider with Cloud Extenders (with GoGrid Cloud Storage) with an emphasis on mirroring standard IT infrastructure services with a focus on ease-of-use through a GUI and programmatic control through an API. Microsoft will be launching their own Cloud Infrastructure in 2009 as well as a variety of Cloud Applications (e.g., Exchange). Google will extend its Cloud Platform with services for storing and serving large files, larger dataset management, pay-for-use enhanced usage and new runtime languages (beyond Python). RackSpace made its move at the end of 2008 with SliceHost and Jungle Disk acquisitions; look to them putting all of the pieces together in 2009.

With Cloud Computing services gaining even more momentum, this is a good market for funding. But the VC’s and others are really doing their due diligence this time through (are they finally learning from their mistakes over the past 10 years?). Cloud Infrastructure providers will not be the ones receiving the scarce capital, I don’t think. I think that Cloud Aggregators (those who work to provide integrated Clouds and management services around them) will be ripe for additional funding. For Cloud Platform providers the outlook is a bit trickier as frequently they are dependent on public run-time languages or maintaining proprietary code to keep momentum. I think the smaller providers may see an influx of capital in order to remain competitive, if not survive. Aggregators need to ensure their own fiscal viability by broadening and diversifying their offerings. If a provider is too attached to EC2, for example, and if Amazon decides to develop functionality that mirrors that of the Aggregator and offer it for free or at a fraction of the cost, the Aggregator will struggle to remain competitive.

Not every corporation or business is looking to the Cloud as the next sliced bread. While the Cloud can be the catalyst for a potentially more sound IT and financial strategy, it will not solve every IT challenge. There are some IT infrastructures that must remain in a private datacenter or running on dedicated, bare-metal servers. Database intensive environments may not be conducive to exclusively residing within the Cloud. This year, GoGrid launched the 1.0 version of Cloud Connect as a way to allow for these types of hybrid (dedicated servers connected to Cloud servers) solutions. Others are calling Hybrid Infrastructure “Cloudbursting.” I expect that some of the strategic partnerships coming in 2009 will include other hybrid solutions of this nature. In fact, they may give way to full mirrored failover or redundancy solutions where traditional infrastructures are mirrored within the Cloud, sharing common datastreams to ensure near-real-time availability of data and services.

I have written about “mashups” and integrations as being a large component of Web 2.0; I have long thought that Web 3.0 will be all about Integration and Standards. nfrastructure integration and companies offering this as a solution, either as consultation or aggregation of technologies, will drive the innovation of Web 3.0. These integrations will help create new and unique SaaS and even PaaS offerings to the market.

Just as Phone Number Portability was an important factor in reforming the telcos during the 1990’s and early 2000’s, I believe that Cloud portability (enabled only through guaranteed standards and interoperability) will be a movement in mid to late 2009. Everyone has “agreed to agree,” and now are making inroads towards standards, a reality. It will be important that the big players in the space (e.g., Amazon, Microsoft, Google) become involved. IBM has tossed their hat into the Cloud ring by announcing a Cloud Computing Certification called “Resilient Cloud Validation” (but only if they collaborate with IBM). Without these big players’ participation, there will be 2 types of clouds (standard and non-standard) and/or companies that provide filters or converters to allow for Cloud Portability.

There is probably a new layer to the Cloud Pyramid that needs to be added, one that resides at the “molecular” level. Chip makers such as Intel, are making plans on enabling Cloud-optimized CPU and other types of chips to allow for a more unique control of built-in switches. They are extremely interested in many of the open and proprietary virtualization technologies out there (Xen, VMware, Virtual Iron, etc.) and are strategizing on how to make their chipsets more compatible and efficient for use in the Cloud. Obviously, their vision is to have all Cloud infrastructures running with “Intel Inside” stamped on them. Many Cloud Computing providers, including GoGrid, already hook into chip-level switches and controls to make better use of the processors. Dell, HP and IBM will most certainly release servers specifically designed and configured for running optimized Clouds. Since all Clouds are powered by physical hardware and as advances are made further propelling Moore’s Law into the stratosphere, Clouds will become more powerful and able to take the place of traditional servers even more readily.

Cloud adoption will be significant in 2009 as Enterprises move beyond simply testing the waters and just using the Cloud for project work. Private Clouds will help with their acceptance and the undeniable call for cost-savings through reduced CapEx will be too loud to be ignored. My gut also tells me that Government will play a much larger role as well. In 2008 I spoke with a person from the French government whose mission it was to bring the Cloud to their government infrastructure. This is only the tip of the iceberg. With the 2008 US Election, Barack Obama proved how critical an online presence is to furthering the concept of “change.” The Obama-Biden Technology Agenda points to the obvious importance of Technology, especially with the appointment of a Chief Technology Officer for the US Government.