April 17, 2024

The Business Market Plays Cloud Computing Catch-Up

“The cutting edge of innovation is on the consumer side — digital technologies for consumption activity, play, entertainment and social-networked communication — and not in corporations anymore,” observed Timothy F. Bresnahan, an economist at Stanford.

Nowhere is that more apparent than in cloud computing, the technology industry’s buzz term for customers’ accessing information held in big data centers remotely over the Internet from anywhere, as if the services were in a cloud.

In the early days of computers, technology advanced because of government-financed research projects and work in corporate laboratories. Hobbyists developed the first personal computers, but it was only when I.B.M. entered the field in 1981, lending its seal of approval, that the PC industry really took off. Selling to businesses paved the way for the leading PC software and chip suppliers, Microsoft and Intel, to become giant corporations.

But marquee companies of the Internet era have made their names and fortunes mainly in the consumer market — both the first-generation Web winners like Amazon and Google, and the second-generation successes like Facebook and Twitter. And they have grown big and grown fast by offering search, shopping and social-networking services in the cloud.

Cloud computing, though, is more than a hyper-efficient means of distributing digital services. The cloud model is animated by a set of Internet technologies for juggling computing workloads in data centers far more efficiently than in the past — potentially reducing costs by about half, analysts say.

Yet to date, the large, established technology companies — and their businesses and government customers — have trailed in cloud computing. The marketing of the cloud, analysts say, is way ahead of real offerings by suppliers and its adoption by business customers.

But there are some recent signs of change. Last week, I.B.M. introduced a range of cloud services, including paying for computing resources like processing and storage on a metered pay-for-use formula, almost as if modeled on an electric utility. I.B.M. will offer customers an à la carte menu, in which they pay for different levels of guaranteed security, support and availability.

I.B.M., a bellwether in the corporate technology market, forecasts that it will have $7 billion in cloud revenue by 2015. Of the total, $4 billion will be customers shifting to cloud delivery from the company’s traditional software and services, and $3 billion is expected to be entirely new business.

“We’re moving to where the puck is going in this industry,” said Steven A. Mills, I.B.M.’s senior vice president for software and hardware. “And we’re more than willing to make this transition.”

In another industry move announced last week, Dell said that it would invest $1 billion over the next two years to build 10 new data centers and expand customer support, largely for cloud offerings.

The largest single customer for computing goods and services, the Untied States government, endorsed the cloud model this year. Vivek Kundra, the White House chief information officer, wrote a “Federal Cloud Computing Strategy” report, and identified $20 billion, or one quarter of the government’s total spending on information technology, as “a potential target” for migration to the cloud.

That document has certainly caught the attention of the government’s technology suppliers, like Lockheed Martin, the largest. “We’re keenly focused on cloud computing,” said Melvin Greer, a senior fellow at Lockheed Martin.

Still, the outlook is for an evolutionary shift toward the new technology spanning several years, even a decade or more, analysts say. People set the pace of technology adoption, and corporate data centers are filled with people whose skills and livelihoods are based on older technology and ways of doing things.

But technology managers, surveys show, are also genuinely concerned about security, reliability and liability if confidential corporate data resides on another company’s computers — and getting locked into proprietary clouds, controlled by one company. Standards groups are moving to set technical rules for sharing data across different clouds, including a working group established last week by the IEEE, a professional electronic and computer engineering organization.

Article source: http://feeds.nytimes.com/click.phdo?i=3e5f806696ce2564ccd5cbc288ad8572

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