A vision about clouds

A friend was asking me the other day what businesses I thought will make the difference in the following years in the software/internet area. So I would like to talk about an expression that is trendy these days: „in the cloud”:

What’s with these clouds? Why „in the cloud” and not „Web 2.0”? Or „SaaS”? Or „Software + Services”? All of these are „buzz-words”, clichés that sound good because they represent the new „internet bubble”. Big businesses – I would even say huge – are inflated around it and that’s where the opportunities in the following years may come from. If we put aside Web 2.0, which most of all suggests social networks (Facebook, MySpace, Hi5, Twitter…) all the others are mainly the same, in the view of the different software Goliaths. That’s because Microsoft (the most important creator of acronyms) couldn’t use the SaaS (Software as a Service) concept promoted especially by IBM; so they created S+S (Software + Service), which actually suits them better. And since all of this has been happening “somewhere”, then they were all gathered under the so-called „in the cloud” umbrella.

OK, all these words and concepts have been spinning around us for 10 years, so you might ask me what got into me; am I trying to invent the wheel here or something. But only for half a year or so, things really started happening. And I am convinced that in the next 5 years we will find ourselves in a business based on “in the cloud” hosting. And so, starting from this assumption, let’s see what the opportunities are (without a special order of preference):

1. You can become a „host”. Meaning that you can have a sort of portal where people can come and receive all kinds of applications, one more business-like than the next – email, erp, crm, file sharing etc… You have two alternatives for this – do things from scratch (contracts with the companies that produce applications, contracts with data centers, hardware, administration, technology etc.) or, simpler than that, you can resell (white-label) a big host’s product (most probably from the States…). And, in this case, the only thing that interests you is promoting your own website.

2. Then I think all these hosts will need applications prepared for this model. And if the big producers of classic software won’t make the switch, smaller newcomers on the market might beat the gun and come out first. Just as salesforce.com (though new to the market) surpassed Siebel, the inventor of CRM, by miles. This might be the place where a shrewd newcomer could use a few shortcuts…

3. Automatic tools that allow the host to supply the same technology (white-label) to the reseller will also have to be built. This is a huge technological challenge and a challenge from the point of view of vision, but the next big money from IT might just come from this direction. For the time being, there are only two companies/products that do something in this area – plesk (from parallels, ex swsoft, Serghei Beloussov’s company – a great visionary in this field) and cpanel (from cpanel inc). Proof of this huge potential market is the fact that HP (that doesn’t enter a new business unless there is a potential 5B$ there), announced in December that in March it’ll launch a similar product. And I know another 3 or 4 big companies that are working in the same area. There are still many unfinished problems; for instance, the issue of the settlement between the different licensing models of apps producers and the host’s unique licensing model to the final customer.

4. And since everything will have to bear the weight of a huge volume of data, the famous grid computing is back with a vengeance. An honest / commercial solution through which a host can treat huge volumes of data in very large server farms will have to appear soon. For the moment, only Google has a viable solution – in-house, Amazon is toying with something but it still has a long way to go. VMWare is well positioned from a technological point of view, but doesn’t seem to understand the opportunity (or it still has a lot to draw from the business it feels comfortable in).

And let’s also look at the existing players on the market – I think everything spins around Google, Amazon and eBay/PayPal, each one coming with a different perspective. Microsoft and Apple are also sitting in the queue, but they kind of missed the start (although Apple is going strong in the mobile phone department and they have a huge opportunity here. Let’s see the famous Windows Phone 7, as well as the iPhone4G reply). There will be lots of money to be made by companies around these players, companies that will find interesting technologies to develop. That’s because there is already fierce competition between the big ones and they will always have the “build or buy” dilemma, especially related to time to market.

So, good luck in business 🙂

(English version by Teodora Popescu)