The Santa Clara Cloud Expo held in November 2011 was the ninth year of the annual industry event. It is difficult to believe that cloud computing technology has been around for so long, when it is constantly written up as being an emerging technology. Of course, the early e-mail services such as Hotmail were among the first practical applications of cloud computing. The 2011 Expo, however, signals that the technology has matured and new business models are evolving that could cause major changes to the IT industry as we have known it for the past 30 years.
Segmentation in cloud computing services
One significant trend identified at the Cloud Expo is that the cloud computing industry is segmenting into three distinct classes of service providers.
Infrastructure
Infrastructure providers are those companies which host the data and application servers, provide connectivity, manage firewalls and ensure data security. The acronym IaaS, (Infrastructure as a Service), is used to describe these services. Amazon Web Services is perhaps the largest at this time, but many new companies such as Rackspace, GoGrid and others are emerging with varying business models and price points to offer multiple options.
Platform
The computing platform space has the early movers Amazon EC2 and Google but is also likely to see the entry of software giants like Microsoft and SAP. The software platform would be customized to work seamlessly with the infrastructure provided by the IaaS companies, so that the applications hosted on them perform irrespective of the architecture of the host servers. The acronym PaaS (Platform as a Service) is used to describe this segment of cloud computing.
Software applications
This is the interface to the computer user. SaaS, (Software as a Service), is also termed as on-demand software. In the past, each computer user had to buy copies of licensed software for each application and then pay annual maintenance fees for upgrades and support, even if his usage of the software suite was only occasional. A good example is the Microsoft Office software suite that resides on millions of personal computers. With SaaS, the user can access the Microsoft office on the cloud and pay a small fee for his usage.
Most business software applications such as accounting, payroll processing, customer relationship management and the like are already designed for hosting on central in-company servers. These would now be hosted on cloud servers to enable even small and medium size companies to use expensive software suites like ERP on an affordable pay-per-use model.
 
With the growth in usage of social media, future software suites, especially those used for interface with the non-business users will need to be designed for a chat-like interface. Already, some internet based shopping portals are designed for this format.
Changes in the computer hardware and software industries
Cloud computing is poised to bring about disruptive changes in both the computer hardware and the software industries. The personal computer industry in the past 30 years has focused on the development of faster microprocessors, faster input-output systems, greater disk and flash memory storage and such silicon related advances.
In the cloud computing environment, the PC would only need a key board and display with some data storage capability. These would make the computers simpler and cheaper and make the product more of a commodity.
The other major change is the use of mobile phones and tablet computers to perform many of the functions that personal computers have been used for. Since the penetration of mobile phones is far greater than that of personal computers, the trend is that cloud computing could accelerate the demise of personal computers in the form that we know them.
The data display from business software applications may need to be tailored to the smaller screens of the portable devices.
The software industry, ranging from the simple Office application suites to the expensive analysis and design software, have traditionally depended on selling millions of copies of the software to multiple users and to then derive annuity revenues from maintenance and upkeep. With the pay-per-use feature of cloud computing, these companies will need to rethink their business models.
Data security issues
In mid-2011, the cyber attack on Sony Entertainment Corp.’s servers caused theft of personal data of several million PlayStation subscribers. The attack was mounted from a fake account created on an Amazon cloud computing platform and not by the conventional hacking process. The perpetrators of this cyber attack have not yet been tracked. Even if found, the legal penalties may be minuscule.
Large corporate computer users have reason to be concerned with the risk of such data theft. Cyber crimes can be carried out across international borders and there is virtually no legal remedy. A single rogue employee at a service provider can cause major losses to the corporate user. This risk has to be weighed against the enormous savings in buying and maintaining the IT infrastructure. It would be interesting to see how this issue gets addressed by the cloud computing industry.
The Cloud Expo 2011 certainly signals that cloud computing is set to transform information access and usage not just at our work place but also in our personal lives.