What you need to know about the year of the cloud

2010 saw Microsoft make a big grab for the cloud, while big business got serious about building clouds of its own

More than anything, 2010 will be remembered as the year Microsoft jumped into the cloud with both feet. Less obvious, but just as important, was growing clarity around the discrete services offered by public and private clouds -- and who is likely to use them.

The cloud is a matrix of services. The categories along one axis should sound familiar: SaaS (software as a service), where applications are delivered through the browser; IaaS (infrastructure as a service), which mainly offers remote hosting for virtual machines; and PaaS (platform as a service), which offers complete application development and deployment environments.

On the other axis is the public vs. the private cloud.

In the public cloud, SaaS showed phenomenal momentum this year. Salesforce.com, the leading SaaS provider, saw its revenue nearly double in 2010 to $2 billion.

Microsoft, SAP, and even latecomer Oracle all have SaaS offerings and major SaaS initiatives underway. And Intuit has quietly evolved into a company that enjoys $1 billion in SaaS revenue serving individual and small-business tax and accounting needs.

By contrast, leading IaaS provider Amazon.com was expected to earn just $650 million from its Amazon Web Services business in 2010, according to a Citigroup estimate in April, which also noted that second-place Rackspace would likely come in at a mere $56 million.

While revenue numbers for the three main PaaS platforms -- Salesforce's Force.com, Microsoft Windows Azure, and Google App Engine -- are not readily available, by all indications these top three play to a very small market.

Small businesses have always led in consuming public cloud services; we hear more and more anecdotes about startups going nearly "all cloud," from accounting to data backup. Big businesses, on the other hand, seem to have overcome their aversion to SaaS only recently, while their pickup of IaaS and PaaS in the public cloud remains spotty. Just as small businesses tend to rent their office space, corporations prefer to own the building -- servers included.

The rise of the private cloud

Instead of turning to IaaS in the public cloud, many big businesses are looking closely at adopting public cloud technologies and techniques as their own. In other words, they want to build so-called private clouds.

Of course, implementing a private cloud requires real work, which InfoWorld's Cloud Computing columnist, David Linthicum, says will be harder than many IT organizations realize. As a result, many will have trouble going the private cloud route.

Why private rather than public? Here's a classic response from Intel's CIO, Diane Bryant: "I have a very large infrastructure -- I have 100,000 servers in production -- and so I am a cloud. I have the economies of scale, I have the virtualization, I have the agility. For me to go outside and pay for a cloud-based service ... I can't make the total cost of ownership work."

Not many companies have as many servers as Intel, but cloud computing, public or private, is all about scale.

With a combination of well-managed virtualization, data center automation, and self-service tools (which allow stakeholders to provision and scale resources without involving IT), each system admin can handle a magnitude more servers -- from an average of around 100 to thousands, according to Bob Muglia, president of Microsoft's Server and Tools Division.

The hardware companies are betting this dynamic will hold true even in the midmarket. Hewlett-Packard, for example, launched its Cloudstart solution in August, which combines hardware (HP BladeSystem Matrix), software (HP Cloud Service Automation), and professional services (HP Cloud Consulting) to yield fast-track deployments. And Dell, which owns the cloudcomputing.com URL, offers various have-it-your way combinations of professional services and products to accelerate private cloud efforts.

IBM jumped in 18 months ago with its WebSphere CloudBurst Appliance, which is basically a blade server preconfigured for Java dev and test that lets developers self-provision resources through a Web interface, with metering of those resources built in. Metering and chargeback, along with an easy Web interface for self-service provisioning, are essential elements of the private version of IaaS.

VMware's introduction of vCloud Director, which takes server virtualization management to the next level, was something of a milestone in this regard. For governance purposes, it goes beyond metering and chargeback to allow customers to establish SLAs for internal accountability.

Even Microsoft is venturing into the private cloud. In July, the company announced it was offering Windows Azure -- its public cloud service -- in a box as the Windows Azure Platform Appliance (or rather many boxes, since it's scaled to run on approximately 1,000 servers or more).

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Eric Knorr

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