I recently ended up in a conversation with a guy who turned out also to work in IT. When I mentioned I worked on cloud computing, he started talking about how it was just the same old song. Before I had a chance to reply, we were interrupted, but I haven’t really been able to push this aside, and I’d like to address this point of view, as it’s probably held by others as well.
He said that he found cloud computing to be “old wine in new bottles”. His arguments were almost exclusively about how outsourcing is a bad idea. The rest of the time he spent pointing out that for all the time he’d had an Amazon S3 account (I think he said 2-3 years) he hadn’t noticed a price reduction in spite of the price of self-hosted storage is ever decreasing.
Cloud computing certainly shares some characteristics with outsourcing. You are running services on someone else’s hardware, in their infrastucture, leaving a big chunk of responsibility with this provider. This is also true for cloud computing. It’s also true that you’re paying a premium for the hardware compared to what it would have cost if you had it in your own data center. The difference between CAPEX and OPEX seemed to be lost on him, along with the fact that you’re also freeing human ressources to work on more interesting things, but none of this is really the point.
Apart from sharing the benefits (and drawbacks!) of outsourcing, cloud computing offers a new level and type of dynamism and availability. If you’re just going to take your Exchange server (his example) or whatnot and put it on a statically allocated cloud server, then yes, it’s the same old outsourcing song. If you, however, design your service so that it can scale horizontally, the dynamism of cloud computing will let you scale both up and down to address changes in demand. This way you save money when your service is idling, yet you can scale up quickly to respond to rising demand. More ressources are (supposedly) always available and right at your fingertips. They’re a simple API call away. Leveraged properly, it’s very likely that you could not only save money running the same service in the cloud, but also be able to deal with fluctuations in service demand much better than you could in your own data center or in an old school outsourcing scenario.
As for his other point, about the prices never decreasing in spite of the cost of hosting these things yourself decreases over time.. That’s a good point. He thought that that was how the these providers were really expecting to make money. I wouldn’t go that far at all, though. What makes cloud computing a viable business is by and large the economy of scale. Hosting lots and lots and lots of virtual servers or petabyte upon petabyte of data is lots cheaper /per unit/ than hosting a few servers and a few terabytes of data, but I have to agree that it does seem that the price per GB of stored data should be decreasing over time in response to the decreasing cost of storage on the market.