Problems like “Simulate crop yields and climate change impact at high-resolution (global extents, multi-scale models, multiple crops – corn, soy, wheat, rice)” carried out at University of Chicago Computing Cooperative are not possible to solve using commercial cloud providers, who do not have the scale and the technology for such leading edge application. One interesting observation is that operating on such a large scale, it creates the illusion of infinite resources inside a grid . Note the “illusion of infinite resources” is subjective. In some cases a few computers or AWS instances are sufficient. In HTC, this illusion can only be achieved after accessing many thousands processors at once.

I’ve written a post on the five misconception on cloud portability
http://natishalom.typepad.com/nati_shaloms_blog/2011/11/five-misconceptions-on-cloud-portability.html

“Cars have been around for over 100 years now, they must be commodity by now, right?”

Here you’re assuming that the process is time based (like diffusion i.e. adoption over time) when in reality it depends upon the actors in the market and competition. Hence evolution from genesis of something to commodity is based upon ubiquity (i.e. how widespread something is, user competition) and certainty (how feature complete something is, i.e. vendor competition).

The nut and bolt took almost 2,000 years to go from genesis (first creation) to late product and commodity (starting with Maudslay’s screw cutting lathe). Electricity took 1400 years from the Parthian Battery to Westinghouse / Tesla and A/C utility provision. Telephony about 100 years and computing infrastructure about 70 years. So, you cannot assume some linear relationship with time.

Secondly, in the above examples (Nut and Bolts, Electricity, Computing Infrastructure, Telephony) these systems have become components of something else (e.g. Machines, Consumer Electronics, Big Data System, Smart Phones).

In industries where the car is a component of something other value chain (e.g. Taxis, Fleets, On Demand hire services etc) then it would be worth looking at whether standardisation has or is occurring (e.g. easy cars etc).

As you point out the car itself has many commodity components but if the system you’re examining is the top level system then you’re always going to have branding, perception of other values which impact it e.g. Gary Dahl’s “Pet Rock” is probably the best loved example of associating a branding value with what remained a commodity … it’s not a rock (which it was) but a “Pet Rock”.

Your comparison of computing infrastructure to cars is one of comparing a component to a higher order system which has other values (i.e. personal branding, status symbol etc). If you compare like for like you’d probably end up with a different conclusion i.e. how many users of Amazon EC2 care or even know what hardware Amazon EC2 runs on – it’s an invisible component, far down the value chain. The same can be said of how many users know or care what specification of nuts and bolts are used to build their car?

“If we allow a few companies to push the technology to a true commodity business model”

First, it’s not companies that drive things towards a commodity model but the interaction of users (demand competition) and companies (supply competition). The question of evolution (which for activities we call commoditisation) is separate from the question of centralisation / decentralisation and the two shouldn’t be conflated.

It would have been relatively trivial for the hardware manufacturers to create a price war in the IaaS space around 2008-2010 in order to fragment the market by increasing demand (computing infrastructure is elastic) beyond the capability of one vendor to supply. The fact they didn’t is their own fault and also the reason why we might see centralisation.

In general,

* The process of evolution (driven by demand and supply competition) is not time based but depends upon the overall interactions of ALL actors (users and suppliers). It is an inevitable process of competition.

* The question of centralisation / decentralisation varies with a number of different economic forces but it usually depends upon the actions of SPECIFIC suppliers. Often you will find that companies are suffering from inertia to change (due to past success) and hence new entrants into a market that is commoditising can quickly capture the market. This doesn’t need to be the case though and the issue is one of executive failure usually of past giants.

“Innovation would be stifled”

Quite the opposite. There are two aspects of innovation here – operational efficiency and creation of higher order systems.

The commoditisation of any pre-existing activities which acts as a component leads to rapid increases in the genesis of higher order systems. From Nuts and Bolts to Machines or Electricity to Radio / Hollywood / Consumer Electronics / Computing or Computing to Big Data and all the changes we’re seeing today. Commoditisation always increases innovation (as in genesis of higher order systems), this effect is known as componentisation (Herbert Simon).

Equally, innovation behind the interface doesn’t stop i.e. electricity was standardised to an interface but innovation still occurs in the means of production (e.g. operational improvements and efficiency or new means of generation). This is the same with all manner of industries from finance to manufacturing (see float glass method of producing glass etc).

You cannot therefore state that commoditisation inhibits or limits innovation, where historical evidence shows it not only allows for innovation in production but accelerates innovation of higher order systems (i.e. each of the major ages – industrial, mechanical, electrical, internet are associated with commoditisation of pre-existing activities).

“Drivers that make unique IT solutions critical”

You’re absolutely spot on that even in a mass market of commodity components there are always niches – same as electricity, finance, most manufacturing etc and you’d expect the same with computing. There will be highly profitable but small niches.

“There are just too many ways to (in this case) build that car”

One of the most important parts of any of the common cycles of changes (i.e. ages) is the disruption of past giants stuck behind inertia barriers due to past success. Disruption comes in two forms – there’s the unpredictable, unforeseeable (e.g. a change in characteristic of a product such as disk drives) and then there’s the predictable (e.g. a shift of an activity from product & rental services to commodity and utility services).

Both cause disruption, the former because it’s unseen, the latter because it’s seen but the company is unable to react (due to inertia which is often embedded in the culture of the organisation). We’ve seen this in every major age and there is nothing which suggest that cloud (which was predicted by Douglas Parkhill in his 1966 book the challenge of the computing utility) will be any different.

The list of companies who believed that their industry would not be commoditised is long and glorious from the gas lamp companies of the past to almost certainly modern infrastructure companies. The problem for all is that their offering is just a component.