Tim O'Reilly Sizes Up the Cloud

Is cloud computing likely to be dominated by a single major player? Tim O'Reilly, Nick Carr, James Urquhart and Reuven Cohen discuss the prospects.

Rich Miller

October 27, 2008

2 Min Read
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It's an interesting moment for cloud computing. Last week Amazon brought EC2 out of beta and Rackspace bought JungleDisk and Slicehost to accelerate their cloud platform. This week Microsoft will announce its long-awaited cloud offering for developers. There was much discussion in recent days about the state of cloud computing and what's to come. Here's a roundup:

  • Tim O'Reilly offered his perspective on the progress and potential of the cloud. "So here's the real trick: cloud computing is real," Tim writes. "Everything is moving into the cloud, in whole or in part. The utility layer of cloud computing will be just that, a utility, without outsized profits. But the cloud platform, like the software platform before it, has new rules for competitive advantage. And chief among those advantages are those that we've identified as 'Web 2.0', the design of systems that harness network effects to get better the more people use them."

  • Nick Carr disagrees with some of Tim's observations about the network effect, and the potential for a dominant player to emerge. "Even on the pure infrastructure end of the industry, power-law distributions (wherein a small number of companies end up capturing most of the business) may well emerge for reasons having little or nothing to do with the network effect," Nick writes. "Indeed, this new industry seems particularly well suited to a concentration of market power."

  • James Urquhart also looks at the prospect for cloud dominance in his post, Is Amazon in Danger of Becoming the Walmart of the Clouds? "With the announcement that they are adding not just a monitoring API, not just a monitoring console, but actual interactive management user interface, with load balancing and automated scaling services, Amazon is for the first time creeping into the territory held firm by the partners that benefited and benefited from Amazon's amazing story," James writes. "The Sun is expanding into the path of its satellites, so to speak."

  • Reuven Cohen at Enomaly, responding to James, says he isn't surprised by Amazon's moves. "It's fairly obvious to me that Amazon doesn't care about whether or not they compete with their community ecosystem," Reuven writes. "Don't get me wrong, the AWS services are awesome, but their partner program is the worst I've seen. Regardless of Rightscales admiration for AWS, it sucks when your trusted partners decide to compete against you."

  • Also worth reading: The Economist has a special report on cloud computing, including a segment that looks specifically at data centers.

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