Forecast for 2010: The Coming Cloud 'Catastrophe'

Cloud computing enthusiasts be warned. Next year, computing services handled remotely and delivered via the Internet may undergo some kind of "catastrophe" that alerts companies and consumers to the risks of relying on the so-called cloud, says Mark Anderson, chief executive of Strategic News Service, an industry newsletter circulated to senior executives at technology companies including Intel (INTC), Dell (DELL), and Microsoft (MSFT). A growing number of businesses and individuals are handing storage and various other tasks to outside providers, from photographers archiving pictures with Yahoo!'s (YHOO) Flickr to companies turning over complicated computing operations to Amazon (AMZN). Tech prognosticator Anderson suggests that the tendency could backfire in some high-profile way in the coming year. "It could either be a service-outage-type catastrophe or a security-based catastrophe," he says. "In either case, it will be big enough. It will be the kind of disaster that makes you say, if you're a [Chief Information Officer]: 'That's why I didn't get involved with the cloud.'" The warning on cloud computing is one of a handful of predictions from Anderson, who in December makes forecasts for the coming year. He also says computing wars will intensify in hardware and operating systems, especially in the mobile arena. Growth in netbooks and smartphones and increased reliance on cloud computing will continue to transform personal computing from the market dominated by Microsoft's Windows and to a lesser extent Apple's (AAPL) Mac. "The desktop will seem like a calm island that is surrounded by chaos, where all these opportunities are with no clear winners," he says. Anderson is particularly bearish when it comes to the cloud. "My hunch is that there will never really be a secure cloud," he says. Businesses will view cloud services more suspiciously and consumers will refuse to use them for anything important, he says. Securosis: cloud will keep growingCloud computing experts note that high-profile security breaches have already occurred. "Clouds don't make applications fail-safe," says Chris Hoff, director of cloud and virtualization services at Cisco Systems (CSCO). He points to Magnolia, the social bookmarking service that crashed and lost all its data earlier this year. "There will be other events like these in 2010, as there were in 2009 and 2008," Hoff says. Still, many companies will conclude that the benefits of network-delivered outweigh the risks. "Even if there is an outage, it won't affect adoptions," says Rich Mogull, an analyst at Securosis, a security research firm. "Providers who compete with the vendor [that] goes down will come around and tell everyone how they're different. There will be some pullback but no dramatic change in adoption of the cloud." Also on the horizon for the coming year, Microsoft will face multiple operating system challenges, including competition from a resurgent Mac OS, Google's Chrome OS (GOOG), mobile operating systems from Android, Nokia's (NOK) Symbian mobile OS, and others. "Two years ago it would have seemed like Windows had this all locked up forever, and now tell me who will win on all those hardware platforms," Anderson says. Netbooks will gain in popularity and within a couple years will become the biggest segment of the personal computing market, Anderson contends. As netbooks and smartphones and Web tablets take hold, content in all forms will continue to break free from long-held restrictions, becoming substantially more mobile-friendly than ever. First-run TV shows and movies will be as readily available on handheld phones as they have been elsewhere—for a price. Apple's iTunes, which sells not only music and TV shows, but also mobile applications, has proven that people are willing to pay for content on their phones, Anderson says. "They'll pay a small amount of money, but they'll happily pay," he says. "Some things will be free, but increasingly they won't be." online content will finally earn cashThe willingness to pay for mobile content, in turn, will drive adoption of small payments, or micropayments, for content, Anderson says. Those over 35 who perceive value to content will be willing to pay. Those under 35, who are accustomed to getting content for free, won't, he believes. As consumers age, Anderson predicts their attitudes will change. News media will also become increasingly willing to charge for content online. In recent months, News Corp. (NWS) CEO Rupert Murdoch has said the company will start charging for content on its newspaper sites. "I hate to say it, but Rupert is right," Anderson says. "People who have things of value in the media business damn well better charge for them." And while software giant Microsoft will continue to dominate on the desktop, Anderson believes the company will lose relevance in the consumer electronics and mobile markets—except in the gaming arena. "It's time to say it: Microsoft has lost its play for consumers," Anderson says. "This is mostly about the phone." The most important mobile players will be Apple, Nokia's Symbian, and Google's Android. Microsoft is going to have difficulty finding new revenue streams, Anderson holds. "It doesn't mean its going to stop growing, but it does mean that its growth is going to be pretty moderate and then it may taper off," Anderson says. How accurate are Anderson's prognostications? Last year he predicted that voice-activated applications would come to smart phones, harnessing computing in the cloud. He forecast that the wireless industry would settle on a technology standard known as LTE, or Long-Term Evolution, for its next-generation technology. And mobile applications such as those on Apple's iPhone, he said, would catch on like wildfire.
Hesseldahl is a reporter for
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