Everybody who knows anything about computers and Internet knows something about Cloud — that most of them even think it is fashionable, nerdy, cool, sophisticated to associate themselves with this term.

Cloud is but a way of letting an user use a resource — a server, storage, application — without worrying about what goes beneath it.

For an individual user, it means getting access to computing power, without having to worry about choices to make (Which server do I need? How much storage do I need?), heavy investments (in building datacenter-class infrastructure, in designing for high availability etc…) and having to get technical about many of these dimensions. If you were a professional photographer or a small business owner, solutions provider or a real-estate broker, it provides idiot-proof IT. Or if you were an end-consumer, you can use it for storage of your music, photos, home-videos etc… or create a backup PC in the Cloud.

For businesses, if it provides one thing it is flexibility. Organizations can ramp-up and ramp-down their infrastructure quicker than their in-house IT teams can utter the world infrastructure.

How do they do it? The secret is really not — it is simply a volume game. If you noticed, almost all the cloud players are already big and have access to huge capital — Amazon, Apple, Google, HP, Cisco etc…This means they are able to spend billions of dollars upfront on infrastructure and wait for customers to start paying for them. In doing so, they do couple of tasks extremely well:

  • They implement a robust metering and pricing system in place. You may have only used 1 hour of a Unix server, but the $1.29 you paid, when added up, pays for its idle time and pays for their profit.
  • They walk the tight rope: The key for them is to have enough capacity to scale reasonable % of their customers up at one time and not have too much idle (read: unbilled) capacity.

Conventional organizations have 90% of their infrastructure severely under-utilized and the remaining 10% upgraded constantly. So he average CIO must be wondering — can I use the under-utilized capacity
to pay for the resource-guzzlers? The 10% of them? Valid question — which is why virtualization is the heart and is at the core of this whole cloud game.

Virtualization allows OS instances to, sort of, move around to other hardware. In other words, they are abstracted from the physical system it runs on, and allows dynamic (and sometimes even automatic) upgrades
and downgrades in horsepower (memory, CPU, disk).

In summary, { virtualization + metering/ pricing technologies + very strong capacity management + strong eco-system } is a win-win, both for the users and the providers. Cloud is just a marketing term.