By Guy Rosen
At the turn of the 20th century, companies stopped generating their own power and plugged into the electricity grid. In his now famous book The Big Switch, Nick Carr analogizes those vents of a hundred years ago to the tectonic shift taking place in the technology industry today.

Just as with electricity, businesses are now turning to on-demand, mass-produced computing power as a viable alternative to maintaining their IT infrastructure in-house.

In this article, we’ll try to hunt down some hard data in order to shed some light on the magnitude of this shift. We’ll also take a look at why it is all so significant, examining what the cloud means for businesses and how it is fueling a new generation of tech startups.

What is the Cloud?

While the exact definition of cloud computing is subject to heated debate, we can use one of the more accepted definitions from NIST, which lays out five essential characteristics: on-demand self-service, broad network access, resource pooling, rapid elasticity and measured service. Of particular interest to us are the three service models NIST describes:

Infrastructure as a service (IaaS) displaces in-house servers, storage and networks by providing those resources on-demand. Instead of purchasing a server, you can now provision one within minutes and discard it when you’re finished, often paying by the hour only for what you actually used. (See also “Elasticity in the Cloud,” page 3, for more.)

Platform as a service (PaaS) adds a layer to the infrastructure, providing a platform upon which applications can be written and deployed. These platforms aim to focus the programmers on the business logic, freeing them from the worries of the physical (or virtual) infrastructure.

Software as a service (SaaS) refers to applications running on cloud infrastructures, typically delivered to the end user via a web browser. The end-user need not understand a thing about the underlying infrastructure or platform! This model has uprooted traditional software, which was delivered on CDs and required installation, possibly even requiring purchase of a server to run on.

The Hype

Research outfit Gartner describes cloud computing as the most hyped subject in IT today. IDC, another leading firm, estimated that cloud IT spending was at $16 billion in 2008 and would reach $42 billion by 2012. Using Google Trends, we can find more evidence of the growing interest in cloud computing by analyzing search volume for the term cloud computing.

It’s extraordinary that a term that was virtually unheard of as recently as 2006 is now one of the hottest areas of the tech industry.

In an attempt to shed some light on de facto adoption of cloud infrastructure, I conducted some research during 2009 that tries to answer these questions.

The first study, a monthly report titled “State of the Cloud” (see www.jackofallclouds.com/category/state-of-the-cloud/), aims to estimate the adoption of cloud infrastructure among public web sites. It’s relatively straightforward to determine whether a given site is running on cloud infrastructure, and if so, from which provider, by examining the site’s DNS records as well as the ownership of its IP. Now all we need is a data set that will provide a large number of sites to run this test on. For this, we can use a site listing such as that published by marketing analytics vendor Quantcast.

Quantcast makes available a ranked list of the Internet’s top million sites (see www.quantcast.com/top-sites-1). To complete this survey, we’ll test each and every one of the sites listed and tally the total number of sites in the cloud and the total number of sites hosted on each provider.

In practice the top 500,000 of these million were used.

The caveat to this technique is that it analyzes a particular cross section of cloud usage and cannot pretend to take in its full breadth. Not included are back end use cases such as servers used for development, for research or for other internal office systems. This adoption of the cloud among enterprises and backend IT systems has been likened to the dark matter of the universe—many times larger but nearly impossible to measure directly.

For now, let’s focus on the achievable and examine the results for the high-visibility category of public web sites. See Figures 1 and 2.

From this data, we can draw two main conclusions:
First, on the one hand, cloud infrastructure is in its infancy with a
small slice of the overall web hosting market. On the other hand, the
cloud is growing rapidly. So rapidly in fact, that Amazon EC2 alone
grew 58 percent in the four months analyzed, equivalent to 294 per-
cent annual growth.

The Reality

The big question is whether cloud computing is just a lot of hot air. To add to the mystery, hard data is exceedingly hard to come by. Amazon, the largest player in the IaaS space, is deliberately vague. In its financial reports, the revenues from its IaaS service are rolled into the “other” category.

Figure 1: Amazon EC2 has a clear hold on the cloud market.

www.acm.org/crossroads
Crossroads