Technology: Understanding 'Cloud Computing'

Like a growing number of companies, the New York Times has its head in the clouds—at least the part of its head that contains its memory. Without using a byte of its own processing power, the newspaper last month provided free, fully searchable access to its 1851 to 1922 archive—more than 15 million articles. How? Derek Gottfrid, the Times's senior software architect, outsourced and used Amazon's cloud computing service. The result is the TimesMachine, a cool application that runs on the paper's Web site and is stored on Amazon's servers. "If we had to do it internally, we probably wouldn't have done it," Gottfrid tells NEWSWEEK.

If you thought Amazon sold only books, you probably think Google is just a search engine. Both Amazon and Google—along with Microsoft, IBM, Dell, Yahoo and other small players—have just started rolling out cloud computing services. Get used to hearing that expression. In April, Gartner Research dubbed it "the biggest buzz phrase of 2008, [but] little understood until 2009." At its most basic, cloud computing is the ability to use software and data on the Internet (a.k.a., the cloud) instead of on your hard drive.

Ten years ago if you wanted to do something with your PC you needed to buy software and install it. The ascent of Web 2.0—to deploy an older buzz phrase—is making that practice obsolete. "Suddenly, what cloud computing allows is for businesses and individuals to use it as if it were their own. It makes computing a heck of a lot less expensive," says tech journalist Nicholas Carr, author of "The Big Switch: Rewiring the World, From Edison to Google."

Driving this leap forward is the proliferation of high-speed Internet connections, cheaper and more powerful chips and drives, and the construction of data centers that house thousands of computers. Also, lest we forget, "IT is a pain," says Mike Eaton, CEO of Cloudworks, a service that runs a suite of business applications, like Outlook, that allows customers access to their files from anywhere. "IT is very expensive, it's difficult to implement, it's highly complicated. It's hard to find people with that expertise and make it affordable and reliable." Businesses, he says, want to focus on delivering their products to customers—not backing up servers or swapping cables at 2:30 in the morning if something goes wrong at a data center somewhere.

You don't need to run a business with an overburdened IT department to see the promise of cloud computing. Apple just got the message with its new personal application suite, MobileMe. But Google has been on board for years with productivity and communications applications like Gmail, Google Reader and its online calendar. For example, this article is being written on a password-protected online Google Doc, not Microsoft Word, which came installed on my PC. I can turn off this computer middraft and access it from any device with a Web connection. In fact, I just did—and I didn't need to e-mail it to myself or print it out. Which suggests that conducting affairs in the cloud is not only convenient, it's also greener: less capital and fewer printouts means less waste.

Google's business suite launched in February 2007 and already has half a million clients running on it, according to Dave Girouard, president of Google Enterprise. "If you want to have a small business anywhere in the world, and all you have is a few computers and you don't want to buy software or have a data center, all you need is a connection to the Internet," says Girouard. "Within five years a huge fraction of businesses—maybe 90 percent—won't host their own e-mail." Microsoft only just launched Office Live and Microsoft Online for individuals and businesses. Coca-Cola's distribution division recently signed up for Microsoft Online, effectively removing e-mail and documents from their own servers and floating them up into Microsoft's cloud.

But what about information security? Companies queasy about storing sensitive data on someone else's servers will ultimately face facts: Google and Amazon probably know a bit about securing data. Adam Selipsky of Amazon Web Services says it's the first question he gets from potential clients. "Amazon has a pretty good, long history of dealing with confidential data, like credit cards," he says. "We take security pretty seriously and feel pretty good about the security mechanisms we have in place."

Still, last Friday Amazon's online store went down for a couple of hours. There are no indications the outage affected other companies' data stored on their servers. But it's a reminder, says Carr, that whenever you're building a complex new infrastructure, there are going to be glitches along the way. If there's a big outage in a system that a lot of companies depend on, the cloud computing model could suffer.

Then there is the fact that the storage and transmission of data across geographical lines can raise thorny legal and political issues: last year France prohibited government officials from using BlackBerries because the servers that house their messages reside in the United States, the United Kingdom and Canada. Indeed, under certain circumstances, it's possible for government agencies—like the National Security Agency or FBI in the United States—to tap into information online and in data centers. Smart countries and companies ought to think carefully before putting sensitive government and commercial information where other governments could possibly peek at it.

"Until those issues are sorted out we don't really know what the structure of this whole industry is going to look like," says Carr. "I don't think any of this is a deal breaker, because the model works. But I do have a sense that the hype about the cloud may be getting ahead of the reality." Sounds like a slightly cloudy forecast, with clear skies further on ahead.