(B) Now that every IT vendor is surfing the wave of cloud computing, and that Wall Street analysts have broadly embraced the concept, it is sometimes difficult not to be confused. It seems that every IT vendor listed on the Nasdaq is probably a cloud computing vendor.

So let’s not be confused by what is cloud computing, who is using it and who is not using it and, who is a provider and who is not a provider of cloud computing!

First, is cloud computing purely hype or reality?

Cloud computing is a reality. Businesses are buying CPU at $0.10 per hour and storage at $0.10 per Gb per month from Amazon Web Services, developing their office documents through Google Docs, getting their ERP system from NetSuite, managing their customer leads with Salesforce.com, and supporting their customers through RightNow.

At the same time, we (you and I) get our music from iTunes, we connect with friends through Facebook, we publish our professional bios on LinkedIn, we find our directions through Google Maps, we share our pictures on Flick , we share our videos on YouTube, we check our e-mails on Yahoo! Mail, we phone with Skype, we IM with Yahoo! Messager, we send updates through Twitter, we search for knowledge on Wikipedia, we buy and sell stuff on Craigslist, we…

Cloud computing is today the most efficient way to deliver, update and tailor any software application as a utility service. The life cycle of software technology is very short. Products are outdated as soon as they are launched. Cloud applications provide to the user the latest applications always-on without any switching costs. And, those products can target  “The Long Tail” or many diversified and particular user market segments.

Additionally, the economics strongly play in favor of cloud computing, and the business model for cloud applications is straightforward: subscription-based or usage-based (pay as you grow). For the user, it provides a lower service cost since the investments in the infrastructure are shared among the various users and applications, and no start-up costs are required. For the provider, the start-up costs into the infrastructure are huge but profits and return on investments come when the service scale and is massively used.

So let’s not be confused: even if some IT vendors are inflating the expectations in particular for businesses, cloud computing is definitely a reality in particularly for consumers.

Second, is there any new significant technology behind cloud computing?

The fair answer lies somewhere between not much and not yet. Cloud computing generally refers to Web-based applications provided from shared software and hardware resources in a data center located somewhere on the Internet. None of those applications need to be physically located where the user is.

Cloud computing needs to provide low application latency, scale to millions of users, be always available and ideally enable secure transactions and protect user privacy. One of the first characteristics of cloud computing is the clear separation between the user interface from the service backend, that enables users to access cloud-based applications anywhere from any device. A second key characteristic of cloud computing is elasticity. Cloud Computing must provide a Web service to a few or hundreds of millions of consumers or 100 servers for one hour or 100 hours of one server to a business.

Cloud computing is definitely an evolutionary step. Started in 1995, businesses redesigned their applications using Web-technologies and launching internally Intranet-based applications. In the late 1990s, a number of service providers started first to host Internet applications, and second to offer themselves applications becoming ASP (Application Service Providers). Cloud computing is just the evolution of those previous trends accelerated by user mobility which requires applications to be accessed from many types of devices (making the browser the only available user interface), and both inside and outside the enterprise network boundaries (making the Internet the only place where resources can be).

So let’s not be confused: cloud computing is a natural evolution of Web-based applications that leverage existing technologies but requires new technologies in particular for its elasticity.

Third, what is the difference between private and public clouds?

Could applications can be rented from a public cloud or owned by an organization, and in that case are part of a private cloud.

Public cloud computing does not require any investments from the organization for the data center resources, and the operations of the datacenter. The scope of the applications that can be provided from the public cloud is obviously limited but capacity is on-demand. A public cloud can be seen as a Virtual Private Network (VPN).

Private cloud computing requires investing and operating the data center. It provides for the organization greater control over the application security, compliance, and QoS. It enables an easier integration between different types of applications and easier support for existing applications.

Vendors have started to consider three layers of cloud computing: Software as a Service (SaaS such as Salesforces.com product offering), Platform as a Service (PaaS such as Amazon Web Services product offering), and Infrastructure as a Service (IaaS such as Rackspace product offering).

So let’s not be confused here, private cloud computing is just the next generation of enterprise data centers, most of the action is going to occur in public clouds for consumers and businesses. Private clouds will just adopt new technologies pioneered by public clouds.

Fourth, who is a buyer of cloud computing and who is not?

All consumers are users of cloud-based applications and in most cases, we do not pay for them since funding is usually provided by advertising.

Small and medium-sized businesses are the most likely buyer of cloud applications services. With cloud computing, there is no need for an IT department. Just buy what you need from salesforce.com or NetSuite.

Large enterprises who have already large IT department and legacy applications will be migrating over time their existing data centers to private cloud technologies.

So let’s not be confused here, the first and foremost buyers of cloud computing applications and infrastructure are businesses that are outsourcing their IT department.

Last, who is a provider of cloud computing and who is not?

That is where a lot of the confusion is. Since, there are not many exciting waves in the computing industry, besides the Mobile Internet, every IT vendor is putting “cloud” in their marketing materials.

The true providers of cloud computing are definitely the salesforce.com (SaaS providers), the Amazon (PaaS providers), and the RackSpace (IaaS providers).

Now is a VMWare, an F5, a Riverbed, an EMC, a Cisco, an IBM a provider of cloud computing technology? Definitely, virtualization, load-balancers, traffic optimization, storage, Ethernet switches, and servers are products that are commonly used in data centers but have also many use cases outside the datacenter. It goes without saying that a lot of today datacenter products cannot be simply re-marketed for cloud computing applications. They need to be redesigned for public cloud applications in particular scale, metering, management, security etc…

So let’s not be confused here, some datacenter technologies and products are new because they are satisfying new requirements to operate cloud applications; some datacenter technologies and products need to be re-engineered to meet the specific requirements for the cloud infrastructure while some other data center technologies and products do not need to be re-engineered.

Note: The picture above is a sunset from a Pacific Island.

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