Blog Post

Bursting the Cloud Bubble: 5 Reasons It's Not Just Hype

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

With all the hype about cloud computing, it’s easy to label it as the latest fad, especially when everyone whose application talks Internet is trying to rebrand themselves as a cloud. But the long view shows that this really is an important change, one of several major shifts in computing that have taken place over the last 40 years, each of them driven by costs and shortages.

Once upon a time, computing was expensive. As a result, programmers carried their stacks of punched cards into basements late at night, and ran them on the mainframe. The CPU was always busy; humans were cheap.

When computing became cheap, bandwidth and storage remained expensive. The CPU was idle, but the links were full. This gave us the PC and client-server architectures. A wide range of clients on a variety of networking protocols kept things complicated, and WAN prices meant most network traffic was local.

Eventually, we settled on browsers, HTTP and TCP/IP. This was web computing, with a simple, standard edge and a tiered core. Client-side broadband access and persistent storage were relatively cheap. (Don’t believe they’re cheap? Go into an enterprise and you’ll find their networks and storage systems have plenty of extra capacity. The same is true for the Internet — if you ignore the impact of spam and P2P traffic.)

Now here’s the cloud. It’s driven by five big things, none of which are hype, and all of which are changing the way we compute.

  1. Power and cooling are expensive. Today, it costs far more to run computers than it does to buy them in the first place. To save on power, we’re building data centers near dams; for cooling, we’re considering using decommissioned ships. This is about economics and engineering.
  2. Demand is global. Storage itself may be cheap, but data processing at scale is hard to do. With millions of consumers using a service, putting data next to computing is the only way to satisfy them.
  3. Computing is ubiquitous. We’ve lost our desktop affinity. Most of the devices in the world that can access the Internet aren’t desktops; they’re cell phones. Keeping applications and content on a desktop isn’t just old-fashioned — it’s inconvenient.
  4. Applications are built from massive, smart parts. Clouds give developers building blocks they couldn’t build themselves, from storage to authentication to friend feeds to CRM interfaces, letting coders stand on the shoulders of giants.
  5. Clouds let us experiment. By removing the cost of staging an environment, a cloud lets a company try new things faster. This is also true of virtualization in general, but by billing on demand the cloud means anyone can experiment.

This truly is a fundamental change in computing, even if its title has been diluted by marketing agendas. We have to be careful not to throw the innovation baby out with the cloud hype bathwater.

15 Responses to “Bursting the Cloud Bubble: 5 Reasons It's Not Just Hype”

  1. Good write up, clear and to the point. I cant say I agree with all the points but the bottom two are true. Overall time will tell but my vote is “FAD”. distributed computing has been around for over 20 years and I see this is marketing gone crazy

  2. Alistair,

    I agree in principle with most of your arguments, however you’re arguments are weighted towards the needs of developers and do not address demand needs. I’ll focus my arguments on those of consumers who:

    1. do not like downloadable software for mobile devices

    2. are about to experience fundamental changes in their living room digital consumption patterns

    3. will likely embrace two-way digital consumption in car while driving

    When you address these demand side needs “diluted marketing agendas” become product development constraints addressable by cloud computing.



  3. A massive shift to cloud computing is an inevitability. Yes, there are scenarios where it isn’t appropriate, many of them revolving around security and privacy, but there are myriad solutions where Cloud Computing is the rational choice.

    I like to focus on Cloud Computing as the on-demand scalable infrastructure and this model will apply to internally managed systems as well and make it much easier to bill out usage to other departments within the organization. Such a scenario would keep your HIPPA and SOX compliance while enabling your organization to reap the rewards of Cloud Computing. You don’t have to blow a hole in the firewall to benefit from it.

    At the other end of the spectrum, there are a lot of small businesses and individuals who are and will do amazing things with the cloud that they just wouldn’t be able to do otherwise.

    Cloud Computing is a leap frog technology. A lot of older companies with tons of infrastructure are going to be left in the dust, because they can’t justify discarding multi-million dollar data centers that provide no more compute power than you can buy today with a credit card, but cost more than that in support and maintenance.

  4. I like the idea of cloud computing – but is it too early right now to ‘dive in?’

    There are new, small businesses coming up every day offering us a cloud computing facility – may of whom will not even be trading in 12 months. Remember, over 50% of new businesses cease trading within the initial 12 months!

    What happens to our data if they go broke and their servers are snatched back by their creditors? What about the security of your data – when the cloud provider no longer owns the servers?

    Another common problem with the initial raft of cloud server services is scaling. New 2.0 businesses tend to grow too fast. They quickly get too many people storing too much data – which is being uploaded and downloaded too frequently and BOOM – it all grinds to a halt. So, there you are about to give a presentation to a major client, when you log on to download your snazzy presentation from ‘the cloud’ and nothing happens! Even Twitter, with all its millions of VC funding find itself ‘broken’ at some point most days!

    I think cloud computing WILL be totally dominant by 2009, but I think it’s best to wait until the market is better established before storing anything mission-critical on ‘the cloud.’

    Jim Connolly
    The Tech News Blog

  5. andjules

    I think #6 (or #1, depending on your point of view) is that it slashes the internal costs of unused capacity & IT maintenance, as Jeff Bezos points out in relation to S3. My company’s IT department COULD put together a RAID appliance for a few hundred dollars, but i) they’ll spend thousands of $$s in labor hours on the purchasing/approval process; ii) most of the capacity will go unused for the first few months, then when it’s really being used, it’ll be time for a new upgrade (more meetings and approvals); iii) they’ll spend thousands more running and re-optimizing (and fretting about) maintenance tasks and security checks on the appliance. While switching to a service like S3 doesn’t necessarily eliminate all work for the IT folks…

  6. The “cloud” as the center of all computing… gosh I just don’t see it happening. As a consultant, not a single one of my clients will move their data to the cloud. Banks – violation of privacy anbd too much risk. Health Care — HIPPA makes that a no go. Government – ID theft and again privacy concerns make it a no go.

    The only place I see this ever happening is in the consumer world.