Cloud computing is a technology that uses the internet and central remote servers to

maintain data and applications. Cloud computing allows consumers and businesses to use
applications without installation and access their personal files at any computer with
internet access. This technology allows for much more efficient computing by
centralizing storage, memory, processing and bandwidth.

A simple example of cloud computing is Yahoo email or Gmail etc. You dont need a
software or a server to use them. All a consumer would need is just an internet
connection and you can start sending emails. The server and email management software
is all on the cloud ( internet) and is totally managed by the cloud service provider Yahoo ,
Google etc. The consumer gets to use the software alone and enjoy the benefits. The
analogy is , 'If you only need milk , would you buy a cow ?' All the users or consumers
need is to get the benefits of using the software or hardware of the computer like sending
emails etc. Just to get this benefit (milk) why should a consumer buy a (cow) software
/hardware ?
Cloud computing is broken down into three segments: "applications," "platforms," and
"infrastructure." Each segment serves a different purpose and offers different products for
businesses and individuals around the world. In June 2009, a study conducted by
VersionOne found that 41% of senior IT professionals actually don't know what cloud
computing is and two-thirds of senior finance professionals are confused by the concept,
[1]
highlighting the young nature of the technology. In Sept 2009, an Aberdeen Group
study found that disciplined companies achieved on average an 18% reduction in their IT
budget from cloud computing and a 16% reduction in data center power costs.[2]

Cloud Computing Segments

Applications: It's all On Demand

So far the applications segment of cloud computing is the only segment that has proven
useful as a business model.The Cloud Wars: $100 Billion at Stake, Published by Merrill
Lynch, May 7, 2008</ref> By running business applications over the internet from
centralized servers rather than from on-site servers, companys can cut some serious
costs. Furthermore, while avoiding maintenance costs, licensing costs and the costs of
the hardware required to run servers on-site, companies are able to run applications
much more efficiently from a computing standpoint.

On Demand software services come in a few different varieties which vary in their
pricing scheme and how the software is delivered to the end users. In the past, the end-
user would generally purchase a servers and is accessed by the end user over the internet.
While this is the most common platform for On Demand software services, there are also
some slightly different offerings which can be described as a hybrid of these two
platforms. For instance, a program through which the end user pays a license fee, but then
accesses the software over the internet from centralized servers is considered a hybrid
service.

• Who is Offering On Demand Software? - The companies below are already

established in the On-Demand software or SaaS business. These companies
charge their customers a subscription fee and in return host software on central
servers that are accessed by the end user via the internet.
o Salesforce.com (CRM)
o Google (GOOG)
o NetSuite (N)
 o Cordys
o Taleo (TLEO)
o Concur Technologies (CNQR)
• Who is Offering Traditional Software? - The following companies have
established themselves as traditional software providers. These companies sell
licenses to their users, who then run the software from on premise servers.
o SAP AG (SAP)
o Oracle (ORCL)
o Blackbaud (BLKB)
o Lawson Software (LWSN)
o Blackboard (BBBB)

Platforms:

Many of the companies that started out providing On Demand application services have
developed platform services as well. The platform segment of cloud computing refers to
products that are used to deploy internet. NetSuite, Amazon, Google, and Microsoft have
also developed platforms that allow users to access applications from centralized servers.

In July 2008, HP, Yahoo! (YHOO), and Intel (INTC) announced a joint cloud
computing research project called the Cloud Computing Test Bed. The companies are
jointly designing and producing the internet based testing utilizing HP hardware and Intel
processors.[3]

• Active platforms - The following companies are some that have developed
platforms that allow end users to access applications from centralized servers
using the internet. Next to each company is the name of their platform.
o Google (GOOG) - Apps Engine
o Amazon.com (AMZN) - EC2
o Microsoft (MSFT) - Windows Live
o SAVVIS (SVVS) - Symphony VPDC
o Terremark Worldwide (TMRK) - The Enterprise Cloud
o Salesforce.com (CRM) - Force.com
o NetSuite (N) - Suiteflex
o Rackspace Cloud - cloudservers, cloudsites, cloudfiles
o Metrisoft - Metrisoft SaaS Platform
o [1] - SUN Oracle direct link
o Cordys Process Factory - The Enterprise Cloud Platform

Infrastructure:

The final segment in cloud computing, known as the infrastructure, is very much the
backbone of the entire concept. Infrastructure vendors environments (such as Google
gears) that allow users to build applications. Cloud storage, such as Amazon's S3, is also
considered to be part of the infrastructure segment.

• Major Infrastructure Vendors - Below are companies that provide

infrastructure services:
o Google (GOOG) - Managed hosting, development environment
o International Business Machines (IBM) - Managed hosting
o SAVVIS (SVVS) - Managed hosting & cloud computing
o Terremark Worldwide (TMRK) - Managed hosting
o Amazon.com (AMZN) - Cloud storage
 o Rackspace Hosting (RAX) - Managed hosting & cloud computing

What does a Shift Towards Cloud Computing Mean?

So who is affected by a paradigm shift in the computing industry? The shift would affect
companies in a few different sub-industries including software companies, internet
service providers and hardware manufacturers. Companies in each of these industries will
face significant change if cloud computing is to be the next step for the industry. While it
is relatively easy to see how the main software and internet companies will be affected by
such a shift, how companies in the internet and hardware sectors will be affected is
slightly more difficult.

Who Gains?

• Consulting/Software/Hardware and Services companies that could gain from

a shift towards cloud computing include:
o IBM

• Software Producers that could gain from a shift towards cloud computing
include:
o NetSuite (N)
o Salesforce.com (CRM)
o Taleo (TLEO)
o RightNow Technologies (RNOW)
o Concur Technologies (CNQR)
o Omniture (OMTR)
o Hyperic
o Quest Software (QSFT)
o Walt Disney Company (DIS)

• Internet-based companies that could gain from a shift towards cloud

computing include:
o Amazon.com (AMZN)
o Yahoo! (YHOO)
o Microsoft (MSFT)
o Google (GOOG)
o Cisco Systems (CSCO)

• Consulting companies that could gain from a shift towards cloud computing
include:
o Cloud Technology Partners
o SAVVIS (SVVS)

Who Loses Out?

• Traditional software producers that could have some catching up to do if

cloud computing ultimately wins out include:
o Oracle (ORCL)
o SAP AG (SAP)
o Blackbaud (BLKB)
o Lawson Software (LWSN)