Cloud computing getting more complex by the day (AMZN, GOOG, AAPL)

By: ispeculatornew
Date posted: 04.29.2011 (5:00 am) | Write a Comment  (2 Comments)

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Very recently, I wrote a post about the brilliance of Amazon’s (AMZN) latest move in the clouds as it launched a solution that fits the needs of people like you and I, namely just storing documents, music and photos among other things. While the big cash remains with business cloud clients, attracting the general population could help build very solid cash flows and despite the business being low margin, the flows are so consistent that it remains a very solid business.

Risky business?

The risk of course is significant in the cloud businesses. Last week, you might have noticed several big websites and web based services experienced downtime. What caused it? Server problems on Amazon’s AWS (Amazon Web Services) that started early Thursday morning and remained unresolved for several hours with more problems occurring in the next few days.Needless to say that the impact for companies that experienced downtime is significant both financially and from a PR standpoint. As our economy moves to the digital world, the reliance on these systems becomes increasingly important and a day like Thursday will certainly be brought up when Amazon sales guys meet with potential clients. Can a hospital store its data in the clouds and risk security breaches or offline time? It is debatable. In cases likes these, both the affected companies take a serious hit. It’s funny how Amazon goes off about the huge promise and importance of AWS services in its earnings calls but on a day like today, we are quickly pointed to the fact that it only represents 2% of Amazon’s revenues and should not be a source of concern. Funny how that works.

Moving to the clouds will not stop

As many questions as there is regarding cloud computing, the move will continue. Despite all of the risks involved, I think it remains a cheaper, better and even often more secure method of running things. That is why companies like Microsoft (MSFT), Google (GOOG) and Apple (AAPL) are putting so many resources into their cloud strategy and why I expect more competition to jump in. Trend Micro has already jumped in  with its own cloud security solutions to solve this.  I think it will be interesting to see what kind of products come out of these companies and how much importance these units will gain within companies like Google and Apple. Some have been writing about companies stopping their move to the clouds but I don’t see it happening. The fact is that no matter where your network is, there are risks involved and being in the clouds or not does not change that.

How big of a business will this become?

I think it will be huge. Not only will most of the international companies be using these services but they will use it more and more and become dependent on it. The big thing is that despite what some would think, the barriers to entry for cloud computing are significant. Google, Apple, Facebook and others are building huge data warehouses, have expensive and rare expertise and it will be difficult for companies to join in. What does this mean? I think it means less competition and as commercial clients become addicted to the clouds, prices will go up and the activity will become more profitable.

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2 Comments

  1. Comment by Dividend Mantra — May 1, 2011 @ 5:27 pm

    I agree with the last paragraph, this business will be huge.

    The concerns delaying it are security and privacy, or namely the public’s view on its security and privacy. Of course, whether you store your data at a centralized server location or not, security and privacy is always determined by the host. Sony’s PSN breach shows us that.

  2. Comment by IS — May 2, 2011 @ 4:26 am

    @Dividend Mantra – No doubt, PSN’s breach is yet another example of how things can turn, I just think there will be so many of these breaches in coming years.

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