Rather than expand or upgrade their technology infrastructure, more and more companies are turning to “cloud computing” for their IT needs. What exactly is cloud computing? The simplest and broadest explanation of cloud computing is that instead of using your own company’s IT resources (such as software, disk storage, database solutions, networking equipment, etc.), you do your computing activities online (in the “cloud”), using another company’s IT resources.
Research firm Gartner Inc. projects that in 2009, global revenue on cloud services will rise 21.3 percent to surpass $56.3 billion. By 2013, that number is expected to reach $150.1 billion. Lots of firms now offer cloud (Web-based) services to meet the demand, including Google’s App Engine, Microsoft’s Azure, Dell’s Cloud Computing Solutions, and Amazon’s Web Services.
Cloud services range from software to infrastructure to platform solutions, and clients pay only for what they use. Because costs are proportional and scaleable (not to mention there’s no need to manage hardware or train new personnel), the barriers for entry or exit are typically low. Likewise, cloud computing makes it easier for employees to access data anywhere in the world, from any device.
A company called 1000 Markets – an online marketplace that makes it easy for online shoppers to buy directly from small, artisan businesses – uses cloud computing to run daily operations. The company’s employees are scattered throughout the US. "We have no central office, and the only hardware we own is the laptops and desktops we have at home," says CEO Matthew G. Trifiro, in a BusinessWeek interview. And because they outsource their technology needs, Trifiro and his team can manage large swings in customer demand, store hundreds of thousands of images, and process customer payments without worrying about the nuts and bolts of doing so.
Cloud computing can also benefit media and entertainment companies, says global consulting firm Accenture. In fact, Accenture expects cloud computing to be an important part of the foundation for future digital supply chains, potentially reducing costs anywhere from 50 to 80 percent. As it says in a recent report: “With an elastic digital media infrastructure that can expand or contract as needed, cloud computing in a digital media environment can help companies scale whenever needed to meet peak demands. They can also dramatically lower their costs, improve process speeds and provide a differentiated capability that can grow market share.”
One example of this technology is the newly launched LegalTorrents.com, which provides artists and entertainment companies with an online platform to distribute digital media files (music, podcasts, e-books, etc.) without them having to invest in costly infrastructure. Companies like Twitter, for their own internal operations, use Google App’s online software for various tasks, including sending and receiving email, sharing and creating documents, and scheduling appointments. The “cloud” can even be used to collaborate on projects such as video editing, says online publication MediaPost.
The key, of course, as Accenture notes, is to identify which processes in the digital supply chain can leverage the cloud, and which ones should be kept in house. After all, relinquishing control — and your data — to another company is not without risks. As tech research and consulting firm Gartner says in a report, customers should ask tough questions and consider getting a security assessment from a neutral third party before committing to a cloud vendor. Such as: Is encryption available at all stages, and were these encryption schemes designed and tested by experienced professionals? Does the vendor have the ability to investigate any inappropriate or illegal activity? What would happen to the data in case of a disaster, or if the vendor goes out of business? And so on.
The bottom line: Cloud computing does have the potential to increase productivity and profit. Whether or not it will lead to a mass migration of business operations to the “cloud” will depend on cost, functionality, security, privacy and legal issues.
As gatekeepers to the Internet, browsers play a key role in the battle for online dominance. Browsers enable us to access Web sites. They control how Web pages are displayed. They can set search engine defaults. Google, for example, pays to be the default search engine on Firefox, Safari and Opera browsers. Meanwhile, Microsoft’s Bing search engine is defaulted on both Yahoo! and its own Internet Explorer browsers. If left unchanged by users, defaulted search engines gain an edge in Web traffic, and consequently, advertising revenues. This is because companies pay search engines to have their ads displayed next to search results, and also pay when users click on them.
And as technology improves, so do the possibilities. Now, browsers are faster and more powerful than ever, and are able to integrate an increasing number of “plug-ins” and run third-party apps. Users get more features and online productivity tools, while companies and developers get a platform to promote and distribute their products. In fact, there’s widespread belief in the industry that soon, all users will really need is a basic operating system and a powerful Web browser. Then, they can access all their data, run software and do all their computing activities online, diminishing the need for expensive, software-laden or resource-intensive computers. It’s called “cloud computing.”
“Many, many applications can be delivered through the browser and what that does for our costs is stunning,” said VP of Google Engineering Vic Gundotra at the recent MobileBeat conference in San Francisco. “We believe the Web has won and over the next several years, the browser, for economic reasons almost, will become the platform that matters and certainly that’s where Google is investing.”
Google recently announced that they are launching a Google Chrome operating system (OS) as a companion to their existing Google Chrome browser. The OS will be opened up to developers later this year. It will initially be targeted to netbooks (which are basic, inexpensive laptops) and will be made available to consumers in the second half of 2010.
Google, however, is not the only company planning to capitalize on the Web browser’s developing role as hub of all user activity. Microsoft’s research unit released a paper earlier this year on a project it calls “Gazelle.” The paper describes Gazelle as a secure browser that would act like the Windows operating system, ensuring that different Web applications run in separate processes. This ensures that the Web applications are protected from each other in cases of failure, even if they are run within the same site. While Gazelle is not yet under implementation, Microsoft researcher Helen Wang tells CNET News: "We’re really trying to leverage the decades of operating system experience and apply that in the Web and browser setting."
Other competitors are also lining up. Marc Andreessen, founder of Netscape (one of the first browsers and largely credited to have popularized the Internet), is reportedly backing start-up RockMelt. Andreessen tells The New York Times that RockMelt is developing a browser that would keep pace with the evolution of the Web. Exactly how is unclear, as little detail has been released.
As the industry moves toward power browsers and Web-centric operating systems, however, a number of questions crop up. How will this affect the digital media value chain? Will these lightweight operating systems (such as Google Chrome and Gazelle) actually end up replacing or outdating their traditional, more powerful — and more expensive —counterparts (such as Windows OS or Mac OS)? Will developers, device manufacturers and retailers support the movement enough to make it work? Perhaps most importantly, will consumers be convinced enough to make the switch? What about security and privacy issues? These questions need to be addressed, and many hurdles still need to be overcome before anyone can say who will win the browser war, or even what the battlefield will end up looking like.
