Companies with their head in the cloud

The concept of the cloud is one that has really grown over the past couple of years. To those in the know it is possibly one of the biggest things to hit the development world since the advent of mass home-broadband connections. To others it kind of lurks in the background and is simply the trendy buzz-word of the geek community.

What is the cloud?

The easiest way to explain this is to look to our old friend, Wikipedia:

“Cloud computing is a style of computing in which dynamically scalable and often virtualized resources are provided as a service over the Internet”

One of the most popular and famous cloud providers is Amazon. To simplify it, they basically charge you for what you use in terms of data and in turn you get to back on to their infrastructure.

The benefits:

Their servers are super resilient
Their servers are very fast
The infrastructure is completely scalable
You never run out of space, you just pay for what you use
Bandwidth is immense, and wont be brought down by stumble/digg traffic

In real terms it means as a small development organisation (as an example) you do not need to worry about taking into account the server infrastructure behind your online application. Providing you have a business model that supports the usage of your app then you’re good to go.

What does it cost?

Cloud computing has a relatively low cost in normal use. You pay on a monthly basis for the space you use. You also pay for data transfer in and out, and for the number of requests and manipulation of the data. This all sound a bit complicated, but the figures are quite small. For example Amazon currently charge around $0.18 per Gb of data storage, and similar for transfer. When you look at the infrastructure behind it that cost is not too bad.

Who uses it?

You probably already use site that use cloud computing. If you post images on twitter you may use the twitpic image hosting service. Go to one of your images on there and view the properties of it, you will see it starts with The image is actually hosted in the cloud, on Amazon’s servers.

Lots of companies are taking on this model in order to rapidly deploy their environments. It is great for them because although their initial traffic is very low, it is completely scalable. In “the old days” you would have to invest up-front for huge servers in anticipation of the traffic you will get 18 months down the line!

The million dollar question!

One thing I have notices over recent years is lots of companies that seem to have a flawed business model. Companies such as Brightkite, an image hosting service combining traditional image hosting with geolocation services (a google map). This company does not charge for it’s services, it’s iPhone app is free. There are no adverts on the site either, so no obvious source of revenue either.

Perhaps Brightkite is looking to build a userbase and then sell out to one of the big boys, or perhaps they will introduce advertising or premium services at a later date, who knows? They are not alone in this though, lots of sites that have sprung up in recent times seem to be “free”. Although cloud computing is relatively low cost, it is not free, so one must wonder what their end-game plan is.

How are they going to turn their good idea into profit?

1 reply
  1. Ana Rodriguez
    Ana Rodriguez says:

    Indeed, we are moving into a new era of networking and cloud computing. I personally believe that companies should start taking advantage of it and start developing their applications using this service. This would definitely reduce costs and open the market. Thanks for the great post!

    Our company just developed a cloud-hosted application. You can take a look at it here: If you like it, you can help us vote for it at the new CloudApp() Contest: The app is listed at the end of the page, under the name of Omar Del Rio.


    Ana Rodriguez


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