Today’s Forecast: Cloudy

Scott McNealy of Sun Microsystems used to call it "the big friggin' web-tone switch" ("Web tone" being the digital successor to "ringtone"). IBM dubbed it "on-demand computing." Others have called it "grid computing" and "software as a service." The latest name is "cloud computing," and it's the hot new dance craze—er, tech trend—that's sweeping the computing industry, generating so much hype that Oracle CEO Larry Ellison, speaking at a conference recently, felt moved to bash the whole cloud phenomenon as just a fad. "Maybe I'm an idiot, but I have no idea what anyone is talking about. What is it? It's complete gibberish. It's insane," Ellison said.

OK. Deep breath. Despite Ellison's skepticism, cloud computing makes a lot of sense. The basic idea is simple enough. Instead of storing your data on your PC, you store it on a server on the Internet. You don't know, or care, where that server is located. Your data might, in fact, be scattered across a bunch of different servers. It's just all up in the sky someplace (hence the name "cloud"). But as long as you're connected to the Internet, with enough bandwidth, you can get at your photos and documents and home movies from wherever you happen to be, using any device you want, such as your mobile phone, a laptop, a media player or an Internet kiosk at the airport. "People are going to put their information not into some device, but into some service that lives in the sky," says Paul Maritz, CEO of VMware, whose "virtualization" software provides a key piece of the cloud puzzle. (Among other things, VMware's software lets techies combine hundreds of servers into a giant pool of computer power, so applications run more efficiently.)

Moving to the cloud means no more trying to remember whether you left your expense-report spreadsheet on the PC at work or the MacBook at home. No more backing up everything to a thumb drive and transferring it from one device to another. No more copying all your stuff from your old PC when you buy a new one. It also means you can create a repository of information that stays with you and keeps growing for as long as you're alive.

Pretty much everyone in the tech industry agrees it's the future—including Microsoft, which last week devoted much of its annual conference for developers to a rollout of new cloud technologies and a pep talk about why customers should jump aboard. We're not there yet: Internet connections aren't fast enough, aren't reliable enough, and aren't available at all times in all places. And some early cloud-like services haven't been so great. Apple's offering, called MobileMe, is supposed to keep my calendar, address book and bookmarks synchronized on my iMac, MacBook Pro and iPhone. But it's not as reliable or as easy to use as it should be. Another problem is that everybody seems to be developing a piece of the puzzle, but nobody has brought all the pieces together. The cloud also raises some thorny issues about who controls your data. These will have to be worked out for the cloud to catch on.

Writ large, the idea of cloud computing can be applied to companies. Instead of operating their own data centers, firms might rent computing power and storage from a service provider, paying only for what they use, as they do with electricity. Amazon, best known as an online bookstore, operates a booming cloud business, renting out computing power and storage space to 440,000 developers, with more than 30,000 more signing up each quarter. Some Amazon customers have never built their own data centers—they just use Amazon instead. "We call them serverless companies," says Adam Selipsky, a vice president at Amazon, in Seattle.

Some companies have started using Amazon to run new applications instead of adding on to their data centers. These include Eli Lilly, The New York Times and National Geographic. Ultimately, Amazon hopes companies will migrate existing computing chores out of their own data centers and over to the cloud. The pitch is simple: it's cheaper. For some, a move to the cloud might cut computing costs in half, says Frank Gens, analyst at researcher IDC. Gens estimates spending on cloud computing will boom from $16 billion this year to $42 billion in 2012. "The cloud is really the foundation for the next 20 years of the IT industry," Gens says.

Tech giants see the same thing, which is why they're racing to deliver cloud products. Microsoft is promoting a new set of programs designed to run Web-based applications. It calls the collection Windows Azure and describes it as an "operating system for the cloud." (Calling it an "operating system" is a bit misleading, since, well, it's not really an operating system. Individual users won't see Windows Azure—they'll just use applications that are running on it.) Google, the search giant, serves up Web-based word processing and spreadsheet applications. Even Oracle, despite Ellison's snarky comments, has introduced a cloud-based version of its database program. Others competing in this space include IBM and Cisco.

Service providers won't admit this, but once they've got your data, they'll try to find ways to lock you in and keep you from switching to another provider. Ultimately, we users may have to make a trade-off—sacrificing some degree of freedom and control in exchange for convenience. If the alternative is the mess we have today, that trade-off may look appealing.

© 2008