Why The Cloud Will Be Services Only

The blog Dawningvalley has a very probing article up on the site on certain aspects of cloud computing and virtual computing in the cloud. For example –

Internet pricing is extremely expensive. For example, look at Amazon S3, one of the most popular cloud hosts around. I looked at how much 160GB was worth, as 160GB should be enough for the average user (of course, it’s far too little for users who do lots of multimedia or graphics editing). It was $24/month, plus $0.10/GB for data transfer. Not bad. But then I looked at NewEgg, a popular online computer store. I found a 160GB Western Digital hard drive with a 7200 RPM, 8MB of cache, and a 3.0GB/s speed. Price? $43.99. In less than two months, the WD hard drive was cheaper than Amazon S3. Just to make sure it wasn’t just Amazon, I looked at Apple’s MobileMe. It only offers 20GB by default, but you can add more storage. It’s not really worth it, though: 160GB of storage is $445/year, or about $37/month. And of course, it’s only compatible with Windows and OS X, leaving Linux users out of the picture.

And this –

But even if those users could be persuaded to switch to broadband or DSL, there’s still the problem that neither are really that fast. Ever tried downloading a gigabyte file? It’s slow. And then, how about uploading the dang thing? Cloud supporters would argue that you’d create everything online so that you wouldn’t have to worry about uploading, but that’s just not true. What about digital pictures? Are you really going to want to wait half an hour for a gigabyte of photos to be uploaded to your cloud? And upload speeds aren’t th only problem. You can’t play Call of Duty 4 via the cloud. It would be way too slow. The only way it could possibly work is if you keep the client and all the graphics on your machine. The problem? Besides the fact that this completely defeats portability, you’ll still need a big hard drive. If that’s the case, what’s the real advantage of cloud computing?

It very well could be that services like S3 will reign supreme for a very long time over those of say Xercerion a cloud based browser based OS. For as long as broadband remains expensive in the US that will be the case. To make a cloud based computer viable it must be capable of booting in less than a minute. Well to do that would require a 50mbs pipe which in our current technological development means FIOS.

The other factor that has to be considered is how democratic IT technology is in pricing. The price one pays for a 1Tb hard drive at Frys is only marginally higher than what Amazon pays for them by the box load. So the fundamental price points are relatively flat for all comers. Amazon’s sole price advantage is in labor per service over the entire compute farm. Fact my current situation with one client is why S3 is so popular. They have a nice new sever but they don’t have the capitalization for a backup box to go with it. So for about $30/month using S3 is a viable alternative. It turns the capitalization issue into an expense stream which they can afford till they can afford the backup solution in-house.

Fact boil this down and this whole discussion is one that major corporations face all the time — in-house departmental development and services vs the corporate IT deptartment doing the same thing. The rub is generally the lone department work effort looks cheaper vs the IT delivered solutions. Well substitute cloud for IT and you have the same set of arguments.

So where does this leave us for the future? Probably right where we are right now.

You will go to the cloud if –

• Scaling is a big issue for your service platform. Think Twitter or YouTube.
• Capitalization of assets is an issue for you.
• Having an offsite backup is mission critical and S3 is cheaper than Iron Mountain.
• Certain infrequently needed services are available thru the cloud which you pay by the drink.

You won’t go to the cloud if –

• The cost of tech remains fairly democratic and flat.
• The cost of transport remains high or not accessible.
• Where immediate access is a must have.
• FOSS makes the cost of software acquisition more favorable than renting the same off the cloud.

Its a new world, but we probably are where we will be in the near term future right now till costs of either high speed transport drop or cloud prices drop thru the floor.