• Technology
  • The Economist

Battle of the Clouds

The fight to dominate cloud computing will increase competition and innovation.

There is nothing the computer industry likes better than a big new idea-followed by a big fight, as different firms compete to exploit it. “Cloud computing” is the latest example, and companies large and small are already joining the fray. The idea is that computing will increasingly be delivered as a service, over the internet, from vast warehouses of shared machines. Documents, e-mails and other data will be stored online, or “in the cloud”, making them accessible from any PC or mobile device. Many things work this way already, from e-mail and photo albums to calendars and shared documents.

This represents a big shift. If you store more and more things online, and access more and more software through an ordinary web browser, it suddenly matters much less what sort of computer you have, and what kind of software it is running. This means Microsoft, which launches the newest version of its Windows operating system this month, could lose out-unless, that is, the software giant can encourage software developers and users to migrate to its new suite of cloud-based services. Its main rival is Google, which offers its own range of such services, and continues to launch new ones and interlink them more closely. Yahoo!, which is allied with Microsoft, and Apple also offer cloud services for consumers; specialists such as Salesforce and NetSuite do the same for companies. Amazon has pioneered the renting out of cloud-based computing capacity. Some firms will offer large, integrated suites of cloud-based services; others will specialise in particular areas, or provide the technical underpinnings necessary to build and run clouds. But battle has been joined (see article).

Life among the clouds

The new approach has great promise. It makes life easier for consumers (no need to install any software) and cheaper, too: many cloud services are free, supported by advertising or subsidised by a minority of users who pay for a premium service. Using a cloud-based e-mail service means you do not have to worry about losing all your e-mail if your laptop dies, and you can access your mail from any web browser. As cloud services expand, the same will be true for other documents and data.

There are also benefits for companies. By switching to cloud-based e-mail, accounting and customer-tracking systems, firms can reduce complexity and maintenance costs, because everything runs inside a web browser. Providers of cloud services, meanwhile, can benefit from economies of scale. Why should every company or university set up and maintain its own mail server, when Google or Microsoft can do it more efficiently? Companies are already happy to rely on utilities to provide electrical power, after all. Cloud computing will do the same for computing power.

The ability to summon computing capacity from the cloud when needed will also give the software industry a shot in the arm. During the dotcom boom, the first thing a start-up had to do was raise the money to buy a room full of servers. If a website experienced a sudden surge in popularity, more servers were needed to meet demand. Today a capacity can be rented as needed, allowing cloud services to scale up smoothly. This lowers barriers to entry and promotes innovation and competition. It also presents an opportunity to Microsoft, Amazon and other companies that are hoping to create the cloud platforms on which other firms will offer services.


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