Andrew Lisy's Blog

What's interesting is to hear different definitions of "the cloud" as it pertains to different areas of business. To a storage engineer, the cloud means bigger datacenters, hungry for hard drives and bulletproof RAID systems. To a telecommunications salesperson, the cloud is a way to hold meetings across the US or even the world without physical presence or expensive dedicated lines. To a scrappy entrepreneur, the cloud is a way to scale an exponentially growing web application on-demand as more users require increasing resources faster than even the best purchasing staff can get hardware spun up and on-line

While these definitions are all convenient in their domains, my favorite definition, which has yet to fail me, is simple: the cloud is about rental. Rental is a powerful concept: it allows people or organizations to use products or services on an as-needed basis, without owning them yourself. Cars, apartments and DVDs all benefit from separating owners and users. 

The cloud is simply an extension of the rental business to all things computing. For the first 50 years of computer history, anyone that wanted to use computers needed to purchase expensive hardware and maintain complicated networks. [Mainframes changed this a bit for some of history but lost favor to cheaper, commoditized hardware. But that's another post]. Companies that wanted a presence on the internet needed to buy servers and try to efficiently balance cost, obsolescence, and load. Users that wanted to get all the benefits that come with PCs -- word processing, storage, internet -- needed to buy relatively expensive desktop boxes that required frequent updates. The three converging factors of cost, obsolescence and load created a game of hot potato such that nobody wanted to take the risk inherent in renting out computing services, because owning and renting out to others was a dangerous proposition.

In the last 3-5 years, the confluence of commoditized hardware, network connectivity, and interconnecting software has made the idea of renting computer services possible. As a result, big companies that are experts at managing some aspect of computing such as storage, software, or processing, can take the responsibility of "owning" the necessary hardware or service and allow others to access their systems for a recurring fee. For many users, renting in this manner is an extremely attractive proposition, because it brings with it enormous flexibility. Individuals can rent space to store pictures, videos and music online, which relieves them of the hassle of backing up and transferring. Entrepreneurs can rent network connectivity and processing power, which allows them to "try out" a new business without the enormous capital commitment of building a datacenter and support staff. Established corporations can simplify their IT organization by renting everything from CRM systems to productivity software to entire operating systems. The cloud means that nearly any user can get the benefits of centrally and expertly managed products without the cost of actually owning and maintaining those products themselves.

It's exciting, because it represents tremendous leverage. Just as mortgages put ordinary people into great homes (some might say too great, but again, another post), cloud computing brings great services to ordinary people and businesses. Allowing a college freshman access to hundreds of computers in an Amazon datacenter for pennies per computing hour has the potential to spawn more businesses than venture capital ever did.  Although "the cloud" might be a popular buzzword, it's also a truly transformational concept that will be around for the long haul. Understanding it for what it really is -- a rental business -- helps cut through the newspeak and lays bare the tremendous implications.