In one of my last post about cloud equals service, I observed that Cloud is simply a short hand for delivering software as a service over the Internet. While perhaps simple in concept, the cloud has an amazing impact on how we consume technology and how we pay for it.
First, let’s look at how we got here from traditional IT and broadcasting services to today’s cloud-based software services.
The traditional IT product delivery model borrowed heavily from classical physical goods commerce. This was because traditional IT depended on the purchase of physical computing hardware customers would install and configure for their solution needs. This model had been so engrained in the market that even when the independent software industry arose with a new product delivery model via a stream of bits sitting on flimsy floppy drives (eventually CDs & DVDs), the software vendors put those tiny things into ten times larger “shrink wrap” boxes to make the customer feel like they had bought something big and valuable.
With cloud, all this has evaporated. It is like you turn on your TV and start consuming the software services. And that isn’t just a good analogy, it is exactly what is happening.
The Internet has turned your computer into an incredibly smart television. Internet addresses (instead of signal frequencies) represent the new “channels” delivered to you through your computer screen using the browser or a richer client application (e.g. apps on iPhone/iPad, Mac, Windows). The new channels are far richer and smarter. Not only can you experience the “content” created by the channel providers (web sites) but you can create, store and distribute your own “content”.
And “content” is not just limited to media, such as music, videos and movies, as it used to be on traditional television. This television delivers anything you can imagine – it is a whole virtual world at your fingertips. You don’t need to go to libraries to research anything, you just “Google” it. Want to read a book, “download” it from Amazon or many other sites. Want to talk to someone, just “Skype” them. Want to send a note, just “email” it.
You can also create your own stuff on this TV – documents, music, videos or entire channels (web sites, blog sites, etc.). Facebook is just a highly personalized social TV channel – you know what is going on in everyone’s life (sometimes whether you want to or not!).
There are other parallels to be drawn here. The “back-end” of cloud services resembles the traditional broadcast and entertainment industry as well. Just like creating movies and TV/Radio programming requires significant upfront investment, so does creating a cloud service. Furthermore, most cloud providers must invest heavily in data center infrastructure to power their cloud solutions.
As such, just like we can end up paying quite a bit for decent television experience, due to the inherent costs of creating and delivering cloud services, we also pay a lot for cloud services, starting with basic Internet access fees itself (and let’s not forget the mobile service charges if you truly want anywhere access).
In my next blog continuing on this theme, I’ll dig in more on the cloud economics and monetization.