Cloud products have been the biggest contributor to the recent watershed developments in the global IT industry. Cloud businesses today boast of a phenomenal growth record. When Eric Schmidt, the CEO of Google uttered the words “cloud computing” in the year 2006, he caught the imagination of a generation of entrepreneurs and technocrats alike. It would not be an exaggeration to state that it was the biggest step enterprises and engineers could think of, in the journey towards creating a flat world. While the concept of the flat world or the borderless world has invited strong cynicism from pundits at B schools, one cannot deny the impact of cloud products in realizing the dream. What started off in 2006 as fever that gripped only Silicon Valley then, has spread like wildfire to all corners of the world. There are some interesting facts that substantiate the claim made here.

Growth Of Cloud Product Categories

Entry Of Heavyweights In The Cloud Computing Industry

Amazon.com, that was once best known for competing against Barnes & Nobles as an online bookseller is making a dash towards cloud products. The information, transmitting giant Juniper Networks has incorporated cloud products into its business model with razor sharp focus. Established heavyweights like Yahoo Inc and Intel Inc have joined hands with other enterprises to craft a research program called OpenCirrus. Even Microsoft has been jockeying for industrial power with the development of its cloud products and services like Office 365, Windows Intune, Microsoft Dynamics CRM and Azure. Google under the regime of its newly coronated CEO Satya Nadella is nursing ambitious plans to strengthen its cloud products division. Even IT companies in emerging economies are reorganizing their business models to accommodate cloud products and services. In fact it would be myopic to overlook the growth in demand for cloud products like hosted billing system, OJS hosting publishing software, CRM software, applicant tracking system and human resource management software across the globe. SaaS enterprises of all ranks are making a beeline to cash in on the opportunity.

Cloud Computing: Old Wine In A New Bottle?

The IT industry has traditionally paid no heed to tradition at all. The language that the IT industry understand is innovation. Although, cloud computing has its fair share of aficionados and followers in the global village, cynics are not too short in number as well. The Oracle CEO Larry Ellison is a one of the chief opponents of the terminology of “cloud computing.” He has in statements issued previously, assaulted the very legitimacy and meaning of the term. He has stated his reservations about the ambiguity of the term. There are obvious reasons for such criticism.

 In the broadest sense the term cloud computing refers to the usage of internet. If that be transformed into a definition, then there is neither a scope nor the necessity to coin a separate term. Many complain that the concept of cloud computing is merely a marketing term to define centralized, mainframe computing. However, the model of today’s cloud computing differs from that of mainframes of the past.It is true that the IT industry is one of those big miracles of the free market innovation machine. It is true that the IT industry thrives on innovation and has always embraced changes with open arms. But it is equally true that the IT industry has dumped technical jargon in the guise of innovation as well. Technical jargon has always been a ploy of business leaders in this industry to package and resell old wine in a new bottle. Is cloud computing a technical jargon? Has the IT industry, yet again tried to sell an existing product with a new tag?

The Economics Of Product Differentiation And Technical Jargon

 The underlying rationale for the IT industry to be divided on this issue needs to be analyzed. Companies have tried to push the likes of “network-distributed parallel processing,” often packaged as “solutions” that are “end-to-end” and “scalable.” The ploy has been to coin a new concept, position a product on that concept and then monopolize it with intellectual property rights. Thus, innovation that is supposed to reach out to the entire industry gets hijacked mid way and stands ransom to a privileged minority. Dell, has in the recent past tried to trademark the term cloud computing. The U.S. Patent and Trademark Office initially gave its nod. But it changed its stand in response to an outburst of vehement protests, including from bloggers incensed that the term could fall under one company’s control. Historian Mr. Bochannek has asserted that cloud computing could join past tech terms — “cyberspace,” “Web 2.0” — that have gone from boom to bust. “The problem isn’t so much the term,” he says, “but the extended usage of it to subsume other things.”

However, the model of today’s cloud computing differs from that of mainframes of the past. First, the sheer amount of resources available makes today’s cloud computing incomparable to mainframe/terminal host computing. It’s nothing for cloud storage providers to quickly add another GB of storage for a customer simply at the customer’s request thanks to scalable and flexible cloud-computing resources hosted by the likes of Amazon, Rackspace and other providers. The efficiency of delivering cloud computing resources is also credited to faster networking and Internet connectivity at a relatively low price. Second, cloud computing is a broad umbrella under which many sub-divisions fall. Cloud computing can include Software-as-a-Service where a specific application or service is offered to a customer as a subscription. Dropbox, Salesforce.com, and QuickBooks are all examples of SaaS.

How Have Investors Reacted To The Cloud Computing Paradigm?

Keeping aside the controversy with new product development and innovation, it has to be accepted that companies that have paid attention to cloud products and services have gained rich dividends. Their performance when assessed in terms of the shareholder value model has been nothing short of phenomenal. A close look at the data on top IT enterprises which have embraced cloud products and services proves this point.

Market Performance of Cloud Enterprises

Cloud products, services and platforms have already announced their arrival on the big platform. Even a corporation like Dell which have traditionally stuck with hardware sales are living up to the change. Michael Dell, during his visit to India last year had candidly admitted the shift in Dell’s strategy. He did confess that Dell did not want to be known for selling boxes. Indian IT majors like TCS and HCL are slowly but surely smelling the coffee. These are still early days to predict if cloud products are here to stay and thus sustain the vagaries of the IT industry. But in the build up to the race for cloud supremacy so far, US based enterprises are already contemplating a whole arsenal of cloud products. It may be rightly concluded that, with the entry of software heavyweights, the competition has just begun. Even start up companies like Netfunda are joining the fray to make the most of the billion dollar opportunity that cloud products offer.