Is a Cloud Revolution on the Way?

So you say you want a revolution? Well, you may just be in luck. It’s about time too, isn’t it? This whole idea of cloud computing has been kicking around since the 1950s. “But, Superb, I thought the cloud was new and cool and cutting edge?” Hey, you’re not wrong, so don’t fret.

Cloud hosting as we know it today is believed to have only started to gain popularity in 2006 when Amazon announced something called “Amazon Elastic Compute Cloud.” Elastic Cloud Compute is described as “a web service that provides resizable compute capacity in the cloud.” It was drawn up to make it possible for web-scale computing to be easy for developers, which surely sounds nice to all of our dev readers out there. The service made it possible to perform computing in the cloud by making it possible to acquire and configure capacity with little friction. Users were handed complete control of their computing resources and permitted to run them on Amazon’s computing environment. Capacity scaling became a cinch thanks to the ability to obtain and boot new server instances in mere minutes.

With users relying on servers in a remote facility to scale up and down at the drop of a hat, they were now paying for the storage capacity they were using, not the capacity that they might need. References to the phrase “cloud computing” actually stretch all the way back to 10 years earlier than Elastic Cloud Compute’s release when they turned up in an internal Compaq document, but Amazon is thought to be responsible for first bringing the term into the limelight. What happened next was many, many tech companies jumped on the bandwagon and began branding remote storage services as “cloud hosting,” and the term soon entered the common lexicon of the business world before spilling over into consumer services shortly thereafter.

Today your company can store all of its customer and prospect data in a storage company’s cloud. You can create documents, spreadsheets, presentations and more in Google’s Drive cloud. You can back up the family’s vacation photos in Dropbox. Your department can even work completely in the cloud using Microsoft Office 365. Basically, if you have data, it can be and probably should be in the cloud.

But it’s only the term “cloud” that’s relatively new. The idea behind it has been in existence since the academic and corporate world started using enormous mainframes in the 1950s and accessed them through thin clients/terminal computers that were capable of communicating but had no internal processors.

Vive la Revolution

In any case, the cloud is ubiquitous today, and a shakeup could be in the cards. Tom Nolle, president of strategic consulting firm CIMI Corp., recently wrote over at Tech Target that he believes three seemingly innocuous and unrelated factors are all set to bring about a cloud revolution of sorts:

  1. Nolle states that the most crucial market signal over the last six months has been the persistent decline of infrastructure-as-a-service (IaaS) pricing. The price cuts could be a sign that cloud providers are competing for more new businesses by waging a price-cutting war of sorts. When this sort of thing happens in any industry it’s the customers who win. Nolle cautions, though, that an unintended byproduct could be a higher degree of difficulty for startups with smart new ideas to break through and survive in the IaaS world.
  2. This one’s all about Big Blue. IBM in January sold off its x86 server business to Lenovo to the tune of $2.3 billion. IBM’s System X, BladeCenter and Flex System blade servers and switches, its x86-based Flex integrated systems, NeXtScale and iDataPlex servers and associated software, blade networking and maintenance operations were all part of the deal. “With the right strategy, great execution, continued innovation and a clear commitment to the x86 industry, we are confident that we can grow this business successfully for the long-term, just as we have done with our worldwide PC business,” Lenovo Chairman and CEO Yang Yuanqing said at the time. Nolle believes IBM spun off x86 because its pricing and profit margins will be under constant pressure moving forward. He goes on to note that commodity servers are good for the cloud business since they’d bring down costs for hosting providers and trim costs for end users comparing cloud expenditures to internal hosting costs.
  3. Finally, there’s the growth of PaaS (platform-as-a-service) and SaaS (software-as-a-service). In addition to their climbing demand, there’s also the expanding market for “platform services” that enhance basic IaaS offerings. Nolle asks why it is that users move up to cloud stack, and he muses about why providers encourage as much by placing their focus on higher-layer services above IaaS.

Could IaaS price drops be a sign that the titans of cloud have realized that adoption rates are 100 percent dependent on pricing? It’s widely believed that users make decisions about whether to host an app locally or on a cloud server thanks mostly to the disparity between the costs of the two. This is based on the idea that the concept of virtually hosting data cannot continue to carry cloud migration all on its lonesome. Major providers chop costs down as low as possible in order to make the cloud more appealing to those who aren’t swayed by its more intrinsic benefits.

But how much lower can providers go before they’re no longer floating in the cloud? In other words, before they hit rock bottom? Perhaps not far at all. Revenues are dropping for those slashing prices with reckless abandon, and Nolle doesn’t think the big boys of cloud have much more to be gained through economies of scale, so the price war could be ending soon. IBM realized as much, which is why it was so willing to part with x86.  With few more responsible cost reductions on the road map, competing for new users is going to get harder. It’s possible that IaaS becomes a loss leader, a cloud Trojan Horse of sorts to bring users on board to purchase other cloud services in addition to IaaS once they’re used to the idea of remote storage.

What Comes Next

When the industry goes beyond simple IaaS cloud services, it will cause the new services to displace more hardware and software costs for the users. This in turn makes it possible for them to overlook increased cloud prices without losing the incentive for migrating. That will then lead to provider support of native cloud application development. Rather than convincing users to move current applications to the cloud, tech corporations will show them the value of moving to applications that can only work on the cloud.

This could potentially mean the elimination of the concept of “hybrid cloud,” because everything in the cloud will be hybrid. Individual elements will spread wide across hosting options, and users and providers will lean on deployment and management tools that converge on a common model.

Nolle thinks it obvious that “the cloud is not a different hosting option for existing applications; it’s a different architecture for application development.” Is he right? Only the future holds the answer to that question, but he builds a strong case for it.

Image Source: Silverlight Hack

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