the mergy notes

People Waiting For Costco

The hype around the cloud computing is getting tiresome.

The recent highly-visible downtime with Amazon is not a rare occurrence, it just happened to be so widespread that Amazon and others that rely on the EC2 infrastructure had to publicly address and acknowledge it. Negative aspects of the ‘cloud’ are rarely addressed. I am sure there are many failures of many different flavors that the larger public never even knows about. I am happy that this recent situation does bring up the downside of what is normally touted as a salvation to many as of late. As the hype dies down over the next few months and years, I think you will see cloud computing settle in as something more along the lines wholesale giant Costco rather than something ubiquitous and unavoidable (as is the current consensus) for a few of major reasons.

Different, But Hardly a Revolution

The term ‘cloud computing‘ is a new term for something that, at it’s core, is nothing new. Yes, the recent technological advances on clustering and the vendors packaging services sitting on top of the newly clustered hardware and software is new, but vendors selling hosted services is nothing new or tremendously revolutionary. You don’t want to all the heft of managing servers and hardware? That was the case back in the mainframe days before the PC revolution of the 1980s and 1990s. You don’t want to try and have all the possible information in the world on your local hard drive? Makes sense. Glad we have an ‘internet’ of connected servers across the world with different types and sources of every-changing information. People farming-out services is not a new thing.

When Price Club and Costco first arrived on the scene, the items they were selling were not new. The channel methods with the vendors, portions of the products sold, wholesaling to the consumer all while grabbing membership dues from the public was the revolutionary part. The consolidated company, Costco, is wildly successful and has a strong model and loyal customers. We shop there every once and while when we have a need for certain types of stuff. We get toilet paper, paper towels in bulk and other items we know we will use a lot of and don’t particularly care about brand or exact details. Many will come to understand this is the kind of service cloud computing provides.

Great For General Needs, But Not Displacing The Specific

You need a bunch of generic toilet paper? Let’s hit Costco. You need a bunch of generic email accounts? Use Gmail instead of buying your own email server, domain name and configuring it all and hosting it in your garage. You need tires for your car cheap and not concerned too much on brand name or options? Costco is great for that. You want someplace to put a basic webserver for a company or personal site? Great – use a cloud provider and let them figure out what to use to serve things up for you to rent. But, just as Costco is not the go-to place of choice for everything you want/need to obtain for your daily life, cloud computing vendors are not going to be the only place to get everything you need or want to go for everything information technology-related. If you are a business, you might head down to Costco to get basic office task chairs, but if you need specific, high-end models, Costco is not the place you are going to buy from.

Costco opened up new options for people to acquire consumer goods but it hasn’t ever displaced the Safeway, 7-11, Target or Whole Foods out there because consumers see it as an option for them, but not the only option or the option they MUST go with. You will see cloud computing and the hype around it dissipate in similar fashion as people realize there are fundamental reasons why you want to continue to have local servers and be able to continue to maintain strategic advantages of various aspects of information technology based on your educated needs. There are, and will continue to be, numerous reasons to keep services local. Even if you have the ability to move them to the cloud, you might not. Specific needs like access to large amounts of file data across a fast local network, ability to have vertical control over all aspects of the network service and be able to be secure in the concepts around where your important information is physically located will never go out of style and will continue to be important to you. You are not wrong. If you feel email/groupware is a critical piece of your information technology, you probably want to keep it in-house at minimal cost vs. renting at Google or another ‘cloud’ vendor. Even though cloud computing companies will evolve with more and more specification of services, they won’t be able to provide the types of tailored systems organizations need (coupled with staff that has your priorities in mind) after they perform thoughtful refection and analysis. You also might not like not having the visibility on services you sacrifice when moving it to the cloud.

TANSTAAFL, But Maybe Free Samples

As with all businesses and services, the old saying “There ain’t so such thing as a free lunch” still applies. Perhaps many people and organizations are so excited about cloud computing because they think it bends the economic reality and they can snag free stuff without regard. Just because the service is in the cloud doesn’t make the underlying economic factors and needs for the vendors coordinating the services any different. They still need to generate profit to stay in business. When you walk the aisles in Costco to get the free samples, they are not there for you to just consume but rather given in the hope they get a few takers to buy the case of their frozen corn dogs or potstickers. If they don’t move enough product, then the samples aren’t working and it is time try something else. This is really no different than Google giving you a free email account to sell ads and harvest user information and behaviors, Ning letting you have groups in their site so you see the value and will be eventually willing to pay or the many others trying to use the ‘Freemium‘ model.

Courtesy of Getty Images

If giving stuff away doesn’t help sell product in the long run, those taquito samples table near the frozen section in Costco go away just like the free access to the cloud system service gets turned off like Ning did a year ago. I see many people, schools and business trying to ride the wave of free stuff just those people roaming the aisles at Costco grazing samples, but that game usually ends poorly. You really don’t want to put critical pieces of what you need to operate and rely on dependent on shaky business models. It is an illusion that you can subsist bouncing from free thing to free thing. It consumes the time and energy that you should be putting into your mission, operations and investment in local resources for those items that are critical to you.

After The Hype, I Welcome Reality

As more incidents like the Amazon failure, Google deleting batches of Gmail accounts, etc. occur, when the VC money lessens and when darling cloud companies like DropBox figure-out they really need to properly monetize and have to stick it to the their users causing outcry, I think the cloud luster will wear-off. A few years ago there were tons of Facebook developers trying to do all kinds of crazy businesses and that was all the rage until reality set-in for the entire ecosystem. This sort of reality will take effect soon for cloud computing as well. I have no doubt and welcome it.

I know where Costco is and maintain my membership, but I don’t load-up on corndogs, peperoncini or frozen chimichangas like I once did. We all tend to make better choices when the options and understandings around them are more mature. We will all still breathe oxygen as the cloud computing hype will mellow to become commonplace but not essential and we will be on to the next hyped, ‘revolutionary’ technology cycle.