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See all Bulls Reasons Bulls Perspectives Companies like IBM envision entreprises without borders on Cloud computing 100% agree Companies like IBM envision entreprises without borders on Cloud computing Factors buffeting the definition of the new class of datacenters include globalization, a rising tide of information and need for expanded flexibility and adaptability for business models. To compete, companies need to operate without borders, and become a globally integrated... read more View or Edit Reason 4 votes 100% agree Bears Perspectives Feeling Bearish? Be the first to explain why this would make a poor investment Send the authors a comment or suggestion disadvantages [Dismiss] [Done] What about security? Cloud Computing would possibly mean a need for much better security. This wo... more [Dismiss] [Done] See All Suggestions

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This article describes a concept which could impact a variety of companies and industries. The article lists companies that could benefit or be harmed by the trend. To see what companies and articles reference this concept page, click here.

Cloud computing refers to emerging computing technology that relies on central servers for the delivery and maintenance of applications. That is, the hardware and software that businesses and consumers use on a daily basis would be centralized and accessed over the internet. This technology allows for much more efficient computing by centralizing storage, memory, processing and bandwidth. There are three segments that make up cloud computing: Applications, Platforms and Infrastructure. Each segment serves a different purpose and offers different products for businesses around the world.

[edit] Cloud Computing Segments

[edit] Applications: It's all On Demand

So far the applications segment of cloud computing is the only segment that has proven successful as a business model.^[1] By running business applications over the internet from centralized servers rather than from on-site servers, companies 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.

OnDemand 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 license from the software provider and then install and run the software directly from on-premise servers. Using an On-Demand service however, the end-user pays the software provider a subscription fee for the service. The software is hosted directly from the software providers' 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.
  • Salesforce.com (CRM)
  • Google (GOOG)
  • NetSuite (N)
  • Taleo (TLEO)
  • 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.
  • SAP AG (SAP)
  • Oracle (ORCL)
  • Blackbaud (BLKB)
  • Lawson Software (LWSN)
  • Blackboard (BBBB)

[edit] 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 applications. Platforms serve as an interface for users to access applications provided by partners or in some cases the customers. Some examples included Salesforce.com's platform force.com, which allows subscribers to access their applications over the 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 platform to encourage further development in cloud computing technologies. The test bed is beginning at six physical locations, each hosting a cloud computing infrastructure utilizing HP hardware and Intel processors.^[2]

• 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.
  • Google (GOOG) - Apps Engine
  • Amazon.com (AMZN) - EC2
  • Microsoft (MSFT) - Windows Live
  • Salesforce.com (CRM) - Force.com
  • NetSuite (N) - Suiteflex
  • Mosso - Mosso, a division of Rackspace

[edit] Infrastructure:

The final segment in cloud computing, known as infrastructure, is very much the backbone of the entire concept. Infrastructure vendors provide the physical storage space and processing capabilities that allow for the all the services described above. The products in this segment are slightly more varied than those in the other areas of cloud computing but include ones such as managed hosting, and development 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:
  • Google (GOOG) - Managed hosting, development environment
  • International Business Machines (IBM) - Managed hosting
  • SAVVIS (SVVS) - Managed hosting
  • Terremark Worldwide (TMRK) - Managed hosting
  • Amazon.com (AMZN) - Cloud storage

[edit] 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 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 industries will be affected is slightly more difficult.

[edit] Who Gains?

• Software Producers that gain from a shift towards cloud computing include:
  • Google (GOOG)
  • NetSuite (N)
  • Salesforce.com (CRM)
  • Taleo (TLEO)
  • RightNow Technologies (RNOW)
  • Concur Technologies (CNQR)
  • Omniture (OMTR)
  • Hyperic

• Internet based companies that will gain from a shift towards cloud computing include:
  • Amazon.com (AMZN)
  • Yahoo! (YHOO)
  • Microsoft (MSFT)
  • Google (GOOG)

[edit] Who Losses Out?

• Software producers that will have some catching up to do if cloud computing ultimately wins out include:
  • Oracle (ORCL)
  • SAP AG (SAP)
  • Blackbaud (BLKB)
  • Lawson Software (LWSN)

[edit] References

1. ↑ The Cloud Wars: $100 Billion at Stake, Published by Merrill Lynch, May 7, 2008
2. ↑ "HP, Yahoo, Intel Launch Cloud Computing Test Bed", www.seekingalpha.com, July 29, 2008.