Last month I attended the single day condensed version of Microsoft’s Professional Developer Conference (PDC) in Boston. (http://www.msdndevcon.com/Pages/start.aspx) Microsoft decided to devote 1/3 of all sessions to Azure. Azure is Microsoft’s new ground-up approach to “Cloud Computing”. According to local Microsoft sources at the conference, this is Ray Ozzie’s big bet for the company. Ray has been in charge of large company bets in the past: Lotus Symphony, Lotus Notes, and Groove Networks (acquired by Microsoft by in 2005.) Cloud Computing is receiving a great deal of fanfare across many industry players, and it seems to be a high stakes game. Skeptics are questioning whether Cloud Computing is real or just an elusive term to create excitement. Before getting too carried away with the term, below is some sobering insight from Larry Ellison:
“The interesting thing about cloud computing is that we’ve redefined cloud computing to include everything that we already do. I can’t think of anything that isn’t cloud computing with all of these announcements. The computer industry is the only industry that is more fashion-driven than women’s fashion. Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?
“We’ll make cloud computing announcements. I’m not going to fight this thing. But I don’t understand what we would do differently in the light of cloud computing other than change the wording of some of our ads. That’s my view.”
Of course we have all seen buzz words come and go, some stick and some don’t.
I worked at Lotus development for most of the 90’s. Remember Lotus? Lotus became well known when it made a splash with 1-2-3, and later Notes. I was part of the Smart Suite team and we were losing market share rapidly to Microsoft Office. In 1998 my colleague, Andrew Wyatt, suggested that we change the business model for Smart Suite. Instead of selling Smart Suite, Andrew’s idea was to give away Smart Suite and to rely on embedded advertising for revenue. Oh my god, what a visionary! Of course at the time the idea was shunned by almost everyone at Lotus, “software just isn’t delivered that way.” In fact it seemed like throughout the latter part of the nineties people kept talking about monetizing web advertizing, but no one seemed to be able to do it. Fast forward 10 years, and we now know that Google, arguably one of the most successful software companies in the world, has been wildly successful at monetizing software advertizing.
How is this related to Cloud Computing? This tale reminds us that ideas which seemed ludicrous at one time, can quickly evolve into a pervasive technology. Today, no one doubts that there is money to be made in online advertizing.
So who is investing in this murky future of cloud computing? What is the potential payoff? What is the sea change we can expect? What are the pitfalls?
Who is Investing in Cloud Computing?
Of course as Larry Ellison points out, he can’t think of anything that isn’t cloud computing. That being said, a lot of companies are claiming to be putting big bets on it:
1. Windows Live: Microsoft has already put a lot of money into moving the existing server applications to a centrally managed set of services embodied by Windows Live.
2. Azure Platform Services: Microsoft’s next generation foray into cloud computing is building a cloud operating system from the ground up.
3. Elastic Compute Cloud (EC2): Amazon’s offering which brags of a “true virtual computing environment.”
4. Google Apps: Google has as set of web applications.
5. Joint R&D effort by Google and IBM: Google and IBM have formed a partnership in which they will invest a combined $30 million over the next two years in Cloud Computing.
6. In 2008 Dell tried to trademark the term Cloud Computing: The US Patent Office turned them down. Dell is working on creating large centralized computing farms so that companies can lease computing power without the hassles of maintaining their own hardware and software.
7. Saleforce.com: A CRM on demand service. One of the first successful Software as a Service (SAAS) models.
8. Intuit’s TurboTax online: Not much to say, people understand this.
The list goes on for pages, but you get the idea. The important thing to realize is that lots of companies are spending a great deal of money and marketing effort to get into the game.
What is the potential payoff?
Robert X. Cringely likens Microsoft’s Azure with the electric power industry. Although Cringely uses the analogy with a different slant, whoever winds up being a utility provider in the computing industry has an annuity that pays dividends on a monthly basis. We all pay the utility companies: electric, phone, and gas, and we rarely look at our bills. There is a huge pot of money to win here.
What is the sea change we can expect?
Imagine a world where we don’t have to worry about our personal computing devices. You don’t have to be too imaginative. Think of the iPhone. If something goes wrong, you walk into your local Apple Store and talk to someone at the genius bar. The big nugget you pay for the iPhone is not the initial cost, but the monthly service charge. In exchange for this annuity you provide to AT&T/Apple you get “worry free” service and the use of applications in the cloud. Of course you don’t even realize that there is a cloud supporting you, instead you think of your computing environment as the device itself. Here is a perfect example: You are listening to a song, you launch Shazam. The phone listens to the music and then acts like it is thinking. What is it really doing? It is sending a captured pattern to a computer in the cloud. Then it waits for the cloud to respond with the name of the song, the artist, and a link to the song on iTunes , where you can buy the song.
What is the impact of cloud computing on businesses? Fast forward ten years. Imagine a world where businesses no longer need to worry about any hardware or software on premise. This is akin to the centrally located telephone switches of the twentieth century (AT&T used to call theirs “Centrex”.) The telephone companies took care of everything. Of course we have seen many swings of this pendulum.
The future may bring monthly payment s for each employee, but no initial investment and no staff needed for upkeep and maintenance. This will allow new businesses to have access to sophisticated software on the day they are established with risk free investments in technology.
What are the Pitfalls?
For anyone who is too young to recall Lily Tomlin’s skit about Ernestine, the telephone operator, on the 1969 Rowan & Martin's Laugh-In, you should watch it before reading the rest of this article on You Tube: (http://www.youtube.com/watch?v=k9e3dTOJi0o.) The point of this skit was that people by-and-large felt that the phone company knew everything about us and used it against us.
In a similar vein, today we can see a more subtle impact on our lives by Apple’s control of what can be installed on our iPhones. Imagine if Microsoft wants to build a version of its media player for the iPhone. Microsoft may want to provide a platform for the iPhone so that non-iTunes music can be played on the iPhone. Will Apple allow Microsoft to distribute the media player on the App Store?
One last anecdote that illustrates the battles that are already occurring between the big players. Microsoft Hotmail looks at the web browser’s signature, referred to as the user agent signature, to identify the type of browser. In the case of the new Google browser “Chrome”, hotmail reports to the user that it cannot run in the browser. In response to this effort by Hotmail to undermine Google’s browser , Chrome is now spoofing its own user agent by reporting that it is a Safari browser. 
What Will we be Saying in 10 Years?
I am not sure what people will be saying about Cloud Computing in 10 years. The term will probably not even be known by young people and one may have to look it up on FuturePedia. It will all be clear to us what the really relevant aspects of cloud computing were, what the important design points were, and who the winners were. It is clear that there is a land grab going on to be at the center of it all.
 “Azure Blues: Microsoft and the electric power industry have a lot in common” (http://www.pbs.org/cringely/pulpit/2008/pulpit_20081030_005501.html)
 Not too dissimilar form Microsoft’s earlier grip on Windows.