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Summary:

Cloud computing may be the most overhyped information technology term in recent memory, surpassed only by the ubiquitous Web 2.0 moniker. As a venture capitalist focused on investing in the infrastructure and platform-as-a-service segments of the cloud, this hype has prompted a slew of startups to flood […]

iStock_000006573008SmallCloud computing may be the most overhyped information technology term in recent memory, surpassed only by the ubiquitous Web 2.0 moniker. As a venture capitalist focused on investing in the infrastructure and platform-as-a-service segments of the cloud, this hype has prompted a slew of startups to flood my inbox, all claiming to be the revenue-generating equivalent of Google or Facebook for cloud computing. And why not? In this environment, leveraging the cloud tag makes a lot of sense when speaking to a VC. But not everything in IT is a cloud.

Case in point: a business plan sent to our firm from a startup claiming to be a purveyor of human-powered vehicles, with a cloud-based infrastructure. Sorry, but a bicycle shop with a web site is not a cloud startup. But while startups using the cloud term to get my attention are amusing, marketing departments of large technology and infrastructure companies that do the same are both annoying and ingenious. Annoying because for those of us who think we understand the technical definition of the cloud, the reality distortion field that these companies are trying to overlay in order to attract enterprise IT buyers is easy to see. That, however, is also why they’re ingenious. After all, the stretching of product definitions or technical features to match a hype-driven market is not unique to the cloud. And the large volume of marketing does help drive perception that the nascent cloud computing market is actually quite mature, which helps to give the cloud startups I would fund a head start with enterprise IT buyers.

So if not everything in IT is a cloud, what is?  When in doubt, I defer to the five essential characteristics recently laid out in the NIST Cloud Computing definition: on-demand self-service, broad network access, resource pooling, rapid elasticity and measured service. If I can see that the products or services I’m examining embody these characteristics — without forcing myself to squint too hard — then I consider them part of the cloud computing market in which I want to invest as a VC. If, on the other hand, they exhibit just a few of those characteristics (if any at all), then I’ll typically conclude that they represent an interesting but not crucial segment of the market — or that they’re simply using the cloud term in an effort to harness the hype surrounding it.

Personally, I’m interested in investing in Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) startups. I think that such cloud computing service models bring new economic realities to enterprise IT; the companies helping to leverage this trend are compelling and have large market opportunities. Bicycle shops with web sites — not so much.

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  1. The Curious Case of Impulse Computing « The SiliconANGLE Thursday, September 24, 2009

    [...] There is a lot of passion around defining cloud computing, and frankly a lot of traditional enterprise vendors are playing defense. In chess they would call it a quiet defense, moving pieces into positions where they can defend dynamically if called upon.If AWS cloud infrastructure as a service is going to replace their customer’s current spend they want to position their architecture as what a cloud ‘is’ to soften the blow. [...]

  2. I couldn’t agree more. There is a tremendous amount of deliberate obfuscation at all levels about cloud computing. Moreover, even within the legitimate cloud space, there still needs to be more differentiation between the various service levels (SasS, PaaS, and IaaS) and deployment models. Thanks for pointing out that great working definitions document from NIST. We could all benefit from more voices of clarity like yours.

  3. Not Everything Is a Cloud | Digital Asset Management Thursday, September 24, 2009

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  5. sure, i think best was to differentiate cloud is in terms of cloud computing(PaaS) & cloud infrastructure(IaaS), i think the confusion has been create by all these SaaS ( now flavored as PaaS) companies who have jumped into Cloud bandwagon & claim to be the cloud which is totally wrong. Attribo3C allows management of your computing resources on public IaaS.

  6. The Challenge of the Mobile Cloud Monday, September 28, 2009

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  8. CNN Explains the Cloud … Badly Wednesday, November 4, 2009

    [...] “web” or “online,” it all would still make sense — but that’s not cloud computing. Cloud computing is providing processing power on demand and charging for it on a per instance [...]

  9. The Cloud and Your Job | Technology is Dead Monday, November 30, 2009

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