Why You Should Embrace Cloud Computing
But for those who have that viewpoint, there may be a rude awakening in store. While public and private IT "clouds" (host-based infrastructure for technology needs) are very much a reality today, a number of caveats and hurdles are ahead for cloud providers and cloud subscribers alike. Those hurdles present opportunities for system builders.
Consider, for a moment, Terremark -- considered one of the top cloud vendors worldwide.
The Miami-based company is currently busy building out its cloud-based and hosting infrastructure, according to its most recent quarterly reports. It will cost many tens of millions of dollars -- money that it will likely have to borrow over the next several quarters just to keep up.
In the meantime, giants like Amazon. com continue to offer their own hosted models and to be hyperaggressive in pricing. Recently, for example, Amazon. com cut pricing on its highest-end, cloud-based storage solution by as much as 50 percent. For enterprises with petabytelevels of storage that they'd like to off-load, that's an attractive model.
For Terremark to continue to compete with Amazon.com, it's going to have to continue spending boatloads of money to build out its infrastructure, and it's going to have to be at least somewhat competitive on price. And consider this: Terremark has never turned a profit in the history of the company.
That's not to say that Terremark will not emerge as a highly profitable, growth-oriented company in the hottest part of IT. But the company will have numerous challenges along the way. All the while, CPU makers and virtualization companies will keep doing what they do best: improving performance, improving management, improving scalability and improving flexibility.
Informed solution providers are advising their customers to consider hybrid models that combine public cloud, private cloud and on-premise solutions for various parts of their IT shops.
System builders have a big opportunity to differentiate themselves here -- by building desktops and servers that provide price-performance differentiation so great that cloud providers will have to keep up with them, not the other way around.
A dual-Xeon server running Microsoft Windows Server 2008 is now capable of running 20 virtual servers in a form factor that's little more than the size of a pizza box. Upgrades from three-, four- or five-year-old servers would provide such great return in efficiency and productivity gains—without the need to migrate to a cloud platform -- that enterprises could feel comfortable in attaining strong savings. And, at the same time, they can still plan out a cloud migration for the next upgrade cycle, if that's what suits them.
IT customers may find Amazon.com's pricing alluring, but there are no guarantees of performance or latency levels. They can find Terremark's offerings attractive, but must keep the company's finances open for consideration lest they run headlong into another Exodus (the once-hot hosting company that collapsed overnight amid debt and a changing market).
The bottom line: The custom system channel has shown the staying power, flexibility and scalability to provide continued upgrades in value along with upgrades in hardware. By comparing that against potential gains that cloud migration will bring, they provide compelling arguments in customer engagements.
Looking ahead, system builders can look forward to a more important role than ever in the transformation of enterprise IT.
The value chain has never been stronger in the custom system channel, and will continue along that path as long as Moore's Law is still alive and well. As the cloud computing environment looks for solid footing, system builders already have theirs firmly planted on the ground.