A quick observation on cloud economics

November 21, 2009

I just finished reading about a panel on cloud economics and the enterprise. One quote in particular stood out:

“I’m not sure there are any unit-cost advantages that are sustainable among large enterprises”

A few years ago some friends of mine had a startup publishing medical journals online. They started off by getting two fractional DS3 lines from MCI and Sprint to their office building. In the basement were a few racks of servers, storage arrays and it was off to the races. Today if someone came up with a plan of that nature, people would look at them funny and say “get a few racks from a colo provider.”  In another few years, I think the phrase is going to change to “get the compute and storage in the cloud.” The cost argument assumes today’s practice on tomorrows infrastructure. Next-generation business logic jobsets are going to be written for cloud frameworks, services and primitives, which should be more aligned with cost structures that make cloud computing more efficient per unit cycle of compute or unit bit of storage.