Business in the Cloud

The Authority on the Future of Technology October 2011 BUSINESS www.technologyreview.com IMPACTPublished by MIT OCTOBER 2011 Business in the Cloud www.technologyreview.com Corporate Energy Strategy 1 Executive Summary CONTENTS The Meaning of the Cloud The Big Question The cloud isn’t just a convenience. It’s a new way of doing business. 2 The Cloud Imperative But as with any new opportunity, there are risks. 3 Cloud Computing Defined By ANTONIO REGALADO Emerged Technologies 4 Facebook Shares Its Designs 5 How to Bid on Computing Power loud computing is an idea whose ernments (see “Transcending Borders, but 6 The Social-Network Chip time has come. As Simson L. Gar- Not Laws,” page 15) or by hackers. While 7 New Directions: TR’s Picks Cfinkel explains in his opening essay, most experts say the cloud is as safe as, if not 9 4 Ideas for Using Server Heat “The Cloud Imperative,” on page 2, the safer than, most company IT departments 11 Google’s Chromebook Experiment notion of purchasing computing power as if (see “Being Smart about Cloud Security,” it were a utility—such as electricity—dates page 20), other researchers are discovering Case Studies 12 The Battle for the Government to the 1960s. What has changed is that this major vulnerabilities (see “Researchers Rain idea has become technically and economi- on Amazon’s Cloud,” page 19). It turns out 13 Hollywood’s Cloud cally feasible. Whether using Gmail, shar- the power of the cloud is nearly as helpful 14 File Sharing Is Serious Business ing files online, or trying out new business to criminal enterprises as it is to legitimate 15 Transcending Borders, but Not Laws software, we now increasingly rely on com- ones (see “The Criminal Cloud,” page 22). 16 Service Blackouts Threaten the Cloud puters located at remote data centers, and The technology that runs the cloud is 17 The Virtual HR Department less and less on desktops or company serv- also evolving. In effect, the operating envi- ers we can actually see, touch, and boot up. ronment for software is no longer our desk- 18 Chasing the African Cloud The consequences are profound. For tops or the corporate server. Instead, it has 19 Raining on Amazon’s Cloud companies, especially small ventures, the become a feature of the Internet itself. One Leaders cloud is democratizing computer power in consequence is that we can use dumber, 20 Being Smart about Cloud Security ways that make them more competitive. cheaper devices, and get our brains from the 21 Can an Open Cloud Compete? In this issue, we show how easy access to cloud (see “Google’s Business Experiment: 22 The Criminal Cloud affordable, unlimited, computer power is Nothing but Web,” page 11). But there is also 24 The Man Behind Cloud Valley affecting industries like computer anima- a growing debate over who will control the tion (see “Hollywood’s Cloud,” page 13) and cloud, pitting proprietary models against 26 The King of Cloud why it now allows startups to quickly launch a burgeoning open-source movement (see Who Coined ‘Cloud Computing’? 27 mass-market software (see “Why Simple File “Facebook Shares Its Cloud Designs,” page 4). Infographics Sharing Is Serious Business,” page 14) that This issue of Business Impact also uncov- 29 Business Gets Remote can challenge even giants like Microsoft. ers the pioneers of cloud computing in the Nowhere is the change as fast as in enter- developing world (see “Chasing the African BUSINESS IMPACT prise software. The shift is toward Web-based Cloud,” page 18). Countries with limited IT is published monthly by Technology Review programs with consumer-friendly design, infrastructures now find they can bypass Senior Editor, Business values, and prices. “In the future, all software decades of legacy hardware and software, Antonio Regalado will be delivered in the cloud,” predicts Sales- just as consumers in those places moved Deputy Editor force.com CEO Marc Benioff, who a decade directly to cellular phones without ever own- Brian Bergstein ago was among the first to predict the rise ing a land-line telephone. Assistant Managing Editor of online business software (see “The King In China, entrepreneur Edward Tian Timothy Maher of Cloud,” page 26). Naturally, established is leading a Beijing technology incubator Art Director software vendors are racing to keep up (see called Cloud Valley (see “The Man Behind Lee Caulfield “The Virtual HR Department,” page 17) and Cloud Valley,” page 24). Tian has a slogan Design Director Conrad Warre move their applications to the cloud as well. that aptly describes the economic proposition The cloud brings difficult legal and secu- that cloud-computing technology offers the Staff Editors Tom Simonite, David Talbot, Mike Orcutt, Erica rity challenges. Many worry that data stored world. “The price of a book,” he says. “The Naone, Emily Singer, Linda Lowenthal online could be subject to snooping by gov- power of a supercomputer.” www.technologyreview.com Business in the Cloud 1 The Big Question run the machine, a second hard drive for The Cloud Imperative redundancy, Microsoft’s Exchange Server Treating computing as a utility, like electricity, is an old idea. But now it 2010 to let an administrator manage the makes financial sense—a historic shift that’s reshaping the IT industry. e-mail, and employee licenses of $35, you’re up to at least $3,250 for a department with By SIMSON L. GARFINKEL 50 employees. Alternatively, you can have your employees use Microsoft’s cloud-based service, Exchange Online, for $10 per user efore Facebook and Google—even What has changed since McCarthy’s time per month, with unlimited storage. On the before the Internet—scientists at is the advent of advanced “virtualization” sys- surface, a $6,000 annual cloud bill might BMIT had a radical vision they called tems that can generate just the computing not seem like the better deal, but doing it the computer utility. resources needed at any time. This means yourself carries high hidden costs, from hir- “Computing may someday be organized as that service providers such as Amazon can ing someone to manage e-mail servers to a public utility just as the telephone system offer a pay-as-you-go utility billing model to keeping up with security updates to pay- is a public utility,” Professor John McCarthy customers on a very large scale. The conse- ing air-conditioning bills for your IT room. said at MIT’s centennial celebration in 1961. quences of this shift are far reaching: today Despite its advantages, many businesses “Each subscriber needs to pay only for the there’s very little need for businesses to pur- aren’t confident about the cloud’s security capacity he actually uses, but he has access chase a computer system other than PCs and and reliability. Yes, Google has had a few to all programming languages characteristic laptops for employees. Whether they need Google Docs outages, and Amazon had an of a very large system.” a mail server or a rack of computers for a embarrassing situation in April 2011, when Those words presciently describe a phe- high-performance computing cluster, com- some customers lost service and data. But nomenon sweeping the Internet today: panies can almost always save money and companies that manage their own data cloud computing. Instead of buying their get better performance by hiring a service have downtime, too—typically more than own computer systems, companies, indi- in the cloud instead of buying their own. a few hours each year. What’s more, Google viduals, and even governments can share Consider the economics of handling and Amazon responded to these outages as time on a common computing infrastruc- e-mail. Today, the cost of an entry-level only publicly traded companies would: they ture. This vast system is cheaper to operate Dell server to receive, store, and route the issued detailed reports on what happened, than many individual computers scattered messages is less than $300. But by the how big the problem was, and what they were among different businesses and agencies. time you add Windows Server software to doing to prevent it from happening again. One of the few areas where cloud-based offerings are not vastly superior to the systems that they replace is desktop produc- tivity apps—word processing, spreadsheets, presentation software, and calendars. Yes, Google and Microsoft both offer cloud-based office applications. But the desktop versions still are faster, more flexible, and easier to use. What’s more, you can put 10 years’ worth of documents on your laptop and edit them anywhere. But be sure to encrypt the files on that laptop—and back them up to the cloud. Although every organization on the Inter- net essentially is using some cloud-based service, they should use more. The econo- mies of scale are mind-blowing. Someone who wants to go buy a rack of servers prob- J ably hasn’t done the math. ASON MADARA SIMSON L. GARFINKEL IS BASED IN ARLINGTON, VIRGINIA. HE FO- SEEDING THE CLOUDS Facebook’s data center in Prineville, Oregon. CUSES ON SUCH TOPICS AS COMPUTER FORENSICS AND PRIVACY. HE IS A CONTRIBUTING EDITOR AT TECHNOLOGY REVIEW. www.technologyreview.com Business in the Cloud 2 The Big Question Daily search requests for “cloud computing” divided by the 2004–2011 average provide scalable databases, message queues, 4.5 Web-accessible storage, and the “Mechanical Turk” system for organizing human com- 4 putation. The Google App Engine, a system for high-performance computing, is another 3.5 example. Microsoft is also a supplier: its 3 Azure service provides preconfigured computers running Windows and SQL Server.

Load more