The Clouds Gather

It was difficult to go anywhere at the 2012 National Association of Broadcasters show without seeing clouds. How many times did you hear a vendor say – “We were cloud-based before there was such a thing as a cloud.” So what is a cloud, and is this a real business and technology trend, or just marketing hype?

The Definition of Cloud Computing

The National Institute of Standard and Technology (NIST) has given us a reference definition. NIST offers five major characteristics, three service models, and four deployment models that compose the cloud model. The five major characteristics are as follows:

• On-demand self-service
• Broad network access
• Resource pooling
• Rapid elasticity
• Measured service

Cloud offerings are based on shared access to storage, compute, and network (bandwidth) resources, with varying degrees of value add applications and services layered over the top.

Déjà vu?

But wait, that sounds familiar – isn’t a content delivery network (CDN) a prime example of a cloud service? What about an online video platform (OVP)? And, for those of us old enough to remember, isn’t this really a return to the mainframe computing model?

As often happens, technology has now come full circle. We've seen the transition from mainframes with terminals (thin clients) to distributed computing (thick clients) in the age of the PC to cloud computing (thin clients again).

Market Forces Behind the Cloud

Three factors are driving this latest transition to the Cloud.

Bandwidth Availability

According to Neilsen’s Law of Internet Bandwidth, connection speed is growing at 50% per year. While this is a bit slower than the compute growth rate of ~60% per year (or doubling every 18 months) institutionalized by Moore’s Law, it has nonetheless brought dramatic changes in the services that can be offered in the cloud. And of course Moore’s Law applies not just to the client end, but equally to computing available in the cloud.

Anywhere Access

While distributed computing locks us down to a specific machine, cloud computing frees us to access our applications from wherever we are, using whatever device is available. Notwithstanding the remaining hurdles of cross-platform compatibility and format fragmentation, we can improve our productivity by accessing cloud-based applications using laptops, tablets, mobile phones, or whatever device is available. And while the transition to mobile devices represents a discontinuity in Moore’s Law on the client side, it leverages much more of Neilsen’s Law of Internet Bandwidth. Anywhere access also facilitates collaboration, as team members access the same content from different locations, further enhancing productivity.

Financial and ROI considerations

Of course none of this matters if the CFO won’t approve the purchase – but this may be the greatest strength of the Cloud model. Rather than purchasing and deploying capital assets (and refreshing them frequently), then hiring technical resources to deploy and maintain them, and paying for the attendant space, cooling, and utility costs, Clouds allow us to pay-as-you-go. Capital expenditures become Operating expenditures, which can be flexed up or down at will, sometimes even minute-by-minute.

Customer Benefits

Cloud models offer substantial financial and business benefits over internal deployment models. In addition to the conversion from Capex to Opex, and reduction in technical staffing requirements, time-to-market is dramatically reduced for companies leveraging Software as a Service (SaaS). There is no need to hire specialists in non-core technology domains; company resources can be reserved for core business value. Even internally developed custom software can leverage the cloud in the Platform as a Service (PaaS) and Infrastructure as a Service (IaaS) models.

The View from the Other Side

Cloud computing also offers benefits to software companies. One-time software sales revenues can be converted to recurring service revenue, resulting in better predictability of financial results. Direct connections to customers may bring more direct feedback on features and functionality, accelerating the product development cycle. And new features can be rolled out incrementally, effectively leveraging current agile software development methodology.

Just the Beginning

These factors are not abating. We can expect the current trends to continue, and probably to accelerate. As bandwidth increases, and as the selection and capability of mobile devices expands, both these trends further leverage the financial benefits of cloud computing.

As more functionality moves to the cloud, we can expect more integration of cloud functionality. This may take the form of integration relationships between cloud providers (Federation). And we may see integration and consolidation within a cloud – for example, integration of third party solutions within the Windows Azure Media Services model. Both models leverage the abundant bandwidth available between clouds, and especially within a single cloud.

Cloud computing is more than just hype. It’s a financially viable model benefitting customers and vendors alike.

In a second installment, we'll look in more detail at the implications of cloud computing for video content.