Info Tech April 24, 2008, 5:00PM EST

Cloud Computing: Eyes on the Skies

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Most of these projects are simple Web sites and applications, but business analysts are beginning to tap Amazon and Google's computers to analyze data on the Internet for business intelligence. Google and IBM have formed an alliance aimed at providing cloud computing services for university researchers. "Large numbers of Internet users are contributing data, pictures, and blogs to the Web sites. We need to be able to mine information out of those huge amounts of data," says Dennis Quan, chief technology officer of IBM's High Performance On-Demand Computing initiative. Here's a view on clouds from Irving Wladawsky-Berger, visionary emeritus at IBM.

Are there different kinds of clouds?

There are. While Google's cloud is ideal for sifting through data, Salesforce.com's is best for running business applications like customer-relationship management and accounting. It offers companies the ability to write their own programs to run on its servers, something it calls "platform-as-a-service." Starbucks (SBUX), for instance, used the Salesforce.com platform to create its new My Starbucks Idea Web site as an online community for employees and customers to share ideas about coffee, food, and the Starbucks experience. It took just one month to get up and running. Starbucks Chief Information Officer Chris Bruzzo says the company handles most of its own computing, but is considering running pieces of its business on other companies' clouds.

Marc Benioff, Salesforce.com's chief executive, has been extolling the virtues of this kind of computing ever since he started the company a decade ago. "I'm not one man and a drum and a monkey anymore," he says. "There's a whole industry emerging."

How mature is the cloud computing technology?

The newest concepts and technologies are still in short pants. There are different schemes for plugging applications into the various platforms—and they're still being refined. Facebook allows other Web developers to create applications that can be used on peoples' Facebook pages, but the developers have to run the applications on their own servers. If demand suddenly spikes, they might not have enough computing power to handle it. On the other hand, Ning, a company co-founded by Andreessen that makes it possible for individuals to operate their own social networks, runs all of the applications on its cloud. One notable Ning customer, rapper 50 Cent, has set up a custom-designed site there, and doesn't have to worry about a sudden rush on the site by the 200,000 people who are members of his Ning fan club.

Where's Microsoft?

The software giant runs its consumer search and communications services on large cloud computing data centers. Just now, it's launching new cloud services for businesses, including e-mail and collaboration, under the Microsoft Online brand. Microsoft's mantra is "software plus services," so its cloud services for businesses are tied in to some extent with its desktop applications such as Word, Excel, and Outlook. While Google now offers such applications in the cloud, Microsoft doesn't. Not yet, anyway.

Are large companies into cloud computing?

So far, few are using it extensively. Corporate software maker SAP (SAP) is looking for ways to offer the efficiency and flexibility of clouds to its customers. IBM (IBM) has built a cloud computing center in Ireland to showcase the new technologies. But analysts say corporations are smart to proceed slowly until the technology advances. "This is Silicon Valley cranking up the dream machine," warns analyst Bruce Richardson of AMR Research.

As more tech companies glom onto the cloud label for marketing purposes, the true potential of the phenomenon is likely to become even more foggy. But eventually, where consumers and business customers find value, tech suppliers will find profits.

Hamm is a senior writer for BusinessWeek in New York.

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