The Economist: "Clouds under the hammer" (March 13th, 2010)

In March, The Economist ran an interesting article on cloud computing and virtualization titled with "Clouds under the hammer": cloud computing is now offered for sale at an auction.

Here is a summary or a paraphrased excerpt from the article:

"Clouds under the hammer"

You might be tired of the word "cloud"("cloud fatigue"). However, the concept of computing as a basic utility delivered over the internet is taking the first steps a tradable commodity like electricity.

A key technology for cloud computing is virtualization, which separates software from hardware, allowing many "virtual machines" to run on any machine. Computing power can move around, even between remote (= far-flung) data centers. Virtualization enables "cloud providers", which offer computing power on demand, such as Amazon Web Services.

Standards bodies are working on rules that would make it easier to move virtual machines around, and a lot of start-ups are making this their business.

• Zimory: ties together corporate data centres to work as one.
 
• CloudKick: offers tools to manage virtual machines.
 
• libcloud: an open-source project uses CloudKick tools that facilitates the development of services spanning difference clouds.
 
• RightScale: is a pioneer of "cloud broking", which helps customers switch between clouds or use several different ones.

The industry's big companies are also working to make computing more replacable.

• VMware: a leader of virtualisation software for corporate data centers has also begun selling its products to cloud providers. If "private clouds" (corporate data centers) and "public clouds" (cloud providers) use the same software, virtual machines can more easily move between them and firms can quickly add
  capacity ("cloud bursting").
 
• Cisco: has announced new technology to link up separate data centers towards its vision of "inter-cloud", a cloud of clouds.

Yet it is probably Amazon that will be seen as the firm that really launched computing markets. In December of 2009, it introduced a new pricing option: customers bid for the Amazon's unused computing capacity and get to run their virtual machines as long as their bid exceeds the minimum price needed to balance supply and demand.

As a result the price moves up and down jerkily (see chart) The virtual machines may be shut down at any time, when the spot price rises above the user's bid. But it already made customers think about computing in more economic terms, by asking what a given job is worth to them.





Amazon's "Spot Instance" has led to an excited debate among the cloud professionals. Some argues that it will go the way of power and even financial markets, complete with arbitrage, derivatives and hedging.  Others argue that there are barriers that could prevent computing from becoming freely tradable. The reason is legal: some European countries do not allow certain types of data to be exported. Moreover, cloud providers have no interest in turning computing into a true commodity.

Both visions of the future may turn out to be right. Virtual machines will indeed increasingly move around, but mostly within private and public clouds or trusted federations of them. Some providers are already experimenting an approach as follows: virtual machines that migrate wherever demand and temperature is lowest --- most often to time zones where night has fallen, when computers tend to sit idle and cooling them is cheaper.