No, cloud CANNOT be sold like a barrel of oil

Oil Drums

It seems every year the word commodity appears when discussing cloud computing.  Yet we are seeing the dominance of Amazon, the emergence of Microsoft Azure as a strong contender. Google’s deep pockets & architecture keep them a credible competitor. None of these players is playing a commodity game despite regularly trumpeting price cuts.

Price cuts are the inverse side of Moore’s Law: instead of trumpeting number of transistors, they trumpet the reduced cost of the compute unit.

So reading this article from GigaOm, “Yes, IT can be sold like a barrel of oil (but it’s going to take some work)“, reminds me that commodity dreams die hard.

Choice quote:

Big companies use commodity contracts to ensure predictable prices for oil, wheat, electricity, metal and other crucial supplies that keep their businesses going. These days, a crucial supply for many companies is cloud computing power — raising the question of whether that too can be bought and traded in the same way as oil or oranges.

A recent partnership suggests the answer is yes, and that we’re heading to a world where companies won’t just turn to Amazon Web Services or Microsoft Azure for cloud services, but to a commodities market that offers the best price, on the spot or in the future, for a range of interchangeable IT infrastructure.

I strongly disagree this is likely in the foreseeable future (3-6 years). Yes there will be price competition but that’s normal.

I wrote about why I don’t believe in this a little over a year ago. Not much has changed.

Here’s the original post where I dismissed brokers: “Brilliant! I Dismiss Service Brokers on Monday. Someone Announces One on Tuesday. Enron Bandwith Exchange Anyone?”

That’s my opinion. Not for the next 3-6 years. And maybe not after that either. But I’m product guy, not a futurist. Just a working class product guy.

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