Cloud Computing Starts to Emerge from Fog of Confusion

A recent published report shows that cloud computing may be on the increase with small and medium-sized businesses. In other news, Rackspace Hosting, Inc. acquired Slicehost LLC, while Amazon.com, Inc. added Microsoft Corp. Windows and SQL Server capabilities to its cloud service.

Focal Points:

• Recent published research reports determined that small and medium businesses are more likely to go to cloud computing. The analysis showed that spending on IT cloud service will increase over the next year, growing to over $40 billion by 2012. Experton Group believes this number is very difficult to get accurately, since almost every service provider and research firm has a different definition of what cloud computing and cloud services are. Sourcing business applications remains one dominant use of cloud services, counting for over 50 percent of service spending in this area.
• Officials from Rackspace Hosting stated that they were planning to acquire Slicehost. This company delivers a service that lets businesses host applications on virtual servers. In addition, Rackspace officials also said they plan to acquire Jungle Disk, Inc., a solution provider that offers remote data storage solutions. Jungle Disks solution will also work with Amazon's S3 service. Since Amazon is a direct competitor with Rackspace for cloud computing services, Experton Group questions how long this interoperability will last. Rackspace recently completed its initial public offering (IPO) in August 2008. Financial details of these acquisitions were not disclosed.
• Executives at Amazon recently announced the addition of Windows and SQL Server capabilities to its cloud service offerings. Officials also announced that their Elastic Compute Cloud Service (EC2) is now in full production. It has spent the last two years in beta. While in beta, support for Windows could be received on either 32 or 64-bit Amazon Machine Images (AMI), with a starting price of $0.125 per hour. SQL Server is available in 64-bit. Officials predict that clients will develop hybrid services, using both the Linux and Windows capabilities of the EC2 cloud services. The EC2 services will have an availability SLA of 99.95 percent uptime. A region is unavailable if more than one availability zone does not have external connectivity.

Experton Group believes cloud computing is likely to grow, especially with smaller companies. The cost pressures that are certainly going to be felt during the upcoming economic slowdown will put added value on the ability to grow (and shrink) compute capacity as it is needed. Because definitions are still adopted for what exactly is built into cloud services, IT executives will need to look very closely at the capabilities, limitations, and business requirements for using these services

In addition, IT executives should understand the SLAs associated with these services, especially if services are being used for mission-critical business applications.