Cloud Computing, Part 1: Clearing the Air

Defining Cloud Computing and What it Means for Service Providers

The per-use model, as opposed to an all-you-can-eat setup, indeed looks popular right now. But that troubles some observers. Users need predictable, controllable costs, they say, or they won’t bother with cloud computing.

“It’s not a good model for the business market,” said Concentric’s Uyeki. “It's like having a cell phone service with no minute buckets, so there’s no predicable monthly fee. The meter's always running, and you don't know what your cost is until you run with it.”

Providers also have to address the cultural barriers to rolling out cloud computing, or they won’t succeed. David Cearley, vice president and analyst at research firm Gartner Inc., said operators must build cloud computing platforms in ways that eschew traditional incumbent thinking. Cloud computing comprises “radically new ideas and approaches that will challenge aspects of their current business models,” Cearley warned. “It will be a grave mistake to just let this bumble along without some sort of C-level strategy statement ... on what they’re willing to accept.”

The Value-Added Opportunity

In any event, besides providing enterprises with flexible, scalable computing power, service providers can take advantage of the cloud computing trend to help market value-added services and applications.

“It provides another option for them to provide more types of applications beyond the core voice and data,” said Microsoft’s Hofstader. “Cloud computing is somewhat synonymous with hosted services, and the industry is evolving to the point where enterprises can integrate and customize business services. They can aggregate different services to allow customized business processes. Microsoft doesn't offer any SIP or VoIP ourselves, so an AT&T or Verizon can use our .NET to provide enterprises with access to their applications.”

For instance, Uyeki noted Concentric will partner with SaaS providers. “The market is pretty broad, and we've done integration with online services before. We'll enable people to order and provision all of their services in a single sign-on.” Concentric is also working with Microsoft to wrap in hosted Microsoft Exchange, among other things.

“I think what we’re going to see is a lot of ‘co-opetition’ between telecom companies and traditional computing vendors and the Web-centric vendors,” said Gartner’s Cearley. However, he noted that any company offering services similar to others’ services will be a competitor.

Microsoft, especially, represents “good news, bad news” for service providers, Cearley said. First, its participation validates the concept of cloud computing, plus it brings the .NET developer community to the table. But Microsoft is throwing so much money and resources at cloud computing that, when it perfects its platform, “it’s going to be a formidable competitor.”

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