PART I – Hyperbole in the cloud: Welcome to the Wild, Wild West

The state of the cloud
It’s hard to find a technology magazine, blog or portal today that doesn’t contain some article or advertisement for cloud computing. It’s even on the evening news!

All of this excitement is for good reason. The migration of computing capacity from private corporate networks to shared public clouds represents a huge opportunity to make IT departments more responsive to the businesses they support. New technology solutions can be deployed more quickly, additional capacity can be added to existing systems “Just in Time” (JIT), and unneeded capacity can be removed before the next billing cycle begins.

The ability of cloud hosting providers to meet demand for heterogeneous technology solutions using a generic pool of computing cycles also promises to dramatically lower costs for companies of all sizes. Computing capacity appears to be nearly unlimited, and customers only pay for the resources that they use.

The analysts certainly agree. In a recent study, Gartner predicted that cloud computing would grow from $58.6 billion in revenue in 2009 to $63.8 billion in 2010. By 2014, the global cloud computing market is expected to be an impressive $148.8 billion. That represents an annual growth rate of more than 16%.

A modern land grab
But the cloud is not limited to silver linings. In fact, there’s a lot of vapor up there. This is an immature market that has just completed its second wave of incubation. There are no clear leaders yet. Literally thousands of startups and established vendors are vying for their piece of the pie. Commonly accepted standards, operating procedures and legal precedents don’t exist. We’re effectively witnessing a virtual land grab, not unlike the Western expansion experienced in the 19th Century.

A point of convergence
It’s easy to be skeptical about such glowing predictions. Indeed, no one – not even Gartner, can reliably predict the future. However, I personally believe that the cloud computing services trend is real. The most compelling evidence at my disposal is the observation that cloud computing isn’t a single product or even a specific service. Rather, it the convergence of several technical and business trends that, when combined, create the basis for a new generation of computing solutions that solve real-world problems. In no particular order, these trends are:

Virtualization
Simply put, the cloud would not exist without virtualization because it allows the cloud to scale efficiently. Virtualization is what transforms a server from a single-tenant platform dedicated to a single purpose into a generic set of computer cycles that can be consumed by anyone to accomplish anything.

Gartner predicts that 60 percent of server workloads will be virtualized with an average density of 10 servers per physical server by 2013. That equates to 5,708 new virtual machines being created each and every hour of every day. They also predict that this workload will be achieved using only 10 percent of the total number of physical servers sold within the same timeframe. In other words, 60 percent of the world’s computations will be accomplished using only 10% of the physical server capacity.

In my next blog post, I’ll share more trends that are leading to new computing solutions.

Questions or comments in the meantime, I’d love to hear from you.

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