Is the Cloud Hype or Reality?

"I think everyone's tired of the Cloud. I think, there is some Cloud fatigue going on. I think that people are starting to say -- you are starting to see articles and say, this is all just a bunch of hype. In some respects, I think, it is. I think some people are attaching Cloud to their brand, into their services, where it doesn't belong, but the basic fundamentals are really, really important. So I think it is absolutely reality and here is why.

It's cheaper, better and more reliable. The last one, I think, I'll get the most complaints about, but very rarely in business, do you get something as all three of these. There aren't many advances in technology where you get things that are better cheaper and more reliable. You usually have to trade. This is why, this is such a buzzword, as you're getting all three of these things. It really, really makes a difference for companies. So let's talk about why it's much cheaper.

So one thing is when you pool computing, you lower your CapEx. How you lower your CapEx? Well, you have higher utilization of your assets. This is the most talked about aspect of Cloud Computing, which is that most people have lots of infrastructure that is sitting unused or is sitting there waiting for when you might need it, but you can't predict that. So that is a driving capital costs up for every single company that they don't need it.

So, when you are sitting in a pool and you can take capacity as you need it, your CapEx goes much lower. Asset life, this is another piece of the capital equation is that when you're sitting in a pool, it comes and goes, people can put applications on it. In traditional IT, often times what happens is you have hardware that sits with an application, and let's say, you want to decommission that application.

Many times you'll say, well, we need to do a hardware refresh and we need to get everything new, because we never know what's going to happen. So assets end up getting not used for their useful life. When it's pooled, it ends up being much easier to do that, which brings the cost down. So that's one piece of dropping the cost. There is also the fact that it's software-powered. That's a huge difference; it is very, very automated.

You can go, sign up in our site at the rackspace cloud and you can launch a server, within five minutes, you're going to have a root password and you can load code and you can get going or you can provision a domain and FTP, a WordPress blog and it will be on 100 servers. You can do this in five, ten minutes.

Now one person is involved, it's completely automated, this is very, very low cost to do and really brings down operational cost. The other piece is you can pay for what you use, because you're using software to carve up the infrastructure, you'll have to pay for what you use and yet, you still have a big pool to call on if you need more.

The last piece, I think, which is not talked about a lot is that the delivered over the web piece also lowers cost because it brings focus to a company on things that are more important. No longer do you have to do the non-strategic things of running data centers and cabling racks or provisioning software, dealing with Dell, whatever it might be. You no longer have to do those pieces; you get a lot more focus in terms of the core pieces of your business.

Finally, by using a Cloud provider, you get economies of expertise. We're a company of about 2700 people, we have experts in every single layer you can possibly think of. So networking, storage networks, load balancing, operating systems, security. We have sort of tons and tons of experts on these things and a lot of expertise is very expensive for any company to replicate. As technology gets more and more complicated, which it does everyday, trying to build the expertise around all of these different components gets very expensive for a company to do.

Unless technology and hosting is at the core of what you're doing, you're not going to want to do that. If you're a retailer, you should not do that. If you're a service provider, you should not do that. So, you get a lot of benefits by being able to use a third-party provider. So here's an example, just a very class example. Let's say, you're someone who's got a terabyte of videos that you want to serve over the web and you serve about ten terabytes a month of video content.

The traditional way to do it is to go get sort of an Enterprise SAN, call EMC or somebody, get Enterprise SAN, put in colocation, call a CDN provider, a Content Distribution provider or not. Just use traditional bandwidth; still going to be expensive when you're buying in small quantities. $2000 a month for the storage, $8000 a month for the SAN.

What you could do with sort of our Cloud files offer today, it's $0.15 a gig, so it's a $150 a month and we have built in Limelight CDN, $0.22 a gig, so that's going to be $2200 a month. So, 76% savings and you get the benefits of this because we're a scale buyer, we have put a lot of engineering into this technology to make it cheap. This is the benefits of specialization.

So radically different price and huge savings. So this is a big reason you are seeing sort of the explosion of video over the web in this case study as it's getting very cheap to do and very easy to do. So this is just one example. We can go through tons and tons of examples where you can save a ton of money, using the Cloud. So, why is it better? A couple of things to think about in terms of it being better. So, we've got this cheaper, how is it better? A couple of things; one is choice. Typically, in an IT department, you make platform decisions; you say, we are a .NET SQL shop or we are a LAMP shop or we are a Java Oracle shop.

Suddenly when you're pulling, using service providers, you can choose a lot different technologies; you don't have to be an expert in all of them. So, if the right tool is some Open Source project that's out there and you want to play with it, you can provision a server on a Linux I/O shop and get it downloaded. So there is a lot of flexibility in terms of what you can use. You can mix and match and, you're now is married to the skills you have internally.

Next one, scalability. So this is, I think, another way to tell that this is just speed. The ability to provision and get access to computing really, really quickly is tremendous and makes a big difference for companies and again, lowers the cost and get you to market really fast. The fact that you can really put up all your infrastructure in an hour is just -- this used to take months to do. So, really makes a difference, both when you're getting going and when you're scaling and need to burst.

The last part is, it's open. RightScale is a partner of ours, SOASTA, Cloudkick, these are people who are building tools on top of the public Clouds. So, if you want something that sort of makes monitoring really easier, provisioning really easy or clustering or load balancing, there are companies that are building tools on top of the Cloud providers that make all the common tasks you are doing all the time much easier.

So there is just so much power being added all the time. We have a company called Slicehost that it's very similar to Cloud server's offer and we had a developer, just randomly built an iPhone App that allows you to provision servers and launch servers and check the status of your servers, this was just done for us. Companies can go out there and use this iPhone App to run their infrastructure. This is the kind of thing that's going to happen with all the large public Cloud providers out there, which makes them just tremendously powerful and more powerful everyday.

More reliable, this is the one that's controversial because we've all seen the stories of outages, they make big headlines and everyone says how can you trust these Clouds? Look, I think there has been hiccups, there is going to continue to be some hiccups. What I would say is, and I stole this idea, someone at Google had made this analogy very, very similar to planes versus cars, which is when a plane -- if something happens to a plane, it is major, major news and we all obsess on it and talk about it and what happened.

When someone dies in a car, it's never discussed. This is very, very distributed. Which one is safer, I think that this is very, very similar to way the Clouds work. It's very difficult to replicate the uptime that the leading Clouds have up there, but when they go down, the Internet goes down and it ends up being a massively noticeable event.

So, look, I think that for some time, this phenomenon is going to continue to slow the adoption, because the perception of quality is going to be a suspect. But I think overtime, you're going to have fewer and fewer plane crashes and I think also people are going to start benchmarking their internal IT versus the services that they put out in the Cloud and they're going to start making some rational choices around it.

So, I think that reliability really does matter. Okay, so this is why I think that the Cloud is real and it is not hype."