Cloudonomics: The Business Value of Cloud Computing, + Website

Is the Cloud Like Electricity?

Electricity is a pay-per-use, on-demand, ubiquitous utility; so is cloud computing. Of course, there are salient differences—data are not undifferentiated the way that electrons are—but can we learn anything by examining their similarities?

Bestselling author Nick Carr argued that an important similarity between the two is the historic migration from private, owned facilities to the public utility.4 He pointed out that, as the industrial era dawned, factories used on-premises power plants: typically a large water wheel to capture the kinetic energy in flowing water and a system of belts and pulleys to transport that power from the water’s edge to the various tools in the factory, such as drills.

To paraphrase Carr’s argument, this strategy of “enterprise power centers,” if we can call them that, requiring local, owned, capital resources, evolved to a pay-per-use, on-demand service model: what we might call “the electric cloud,” where the huge economies of scale and other benefits associated with enormous “cloud electric centers” dwarfed what could be achieved locally. The argument posits the inevitability of this transformation. In effect, nobody but some sort of Luddite or survivalist living in the wilds generates their own electricity or does without.

The thesis of this line of argument is clear: An industry’s evolution to a pure service model delivered from highly consolidated and vertically integrated facilities exhibiting immense economies of ...