nomic level, the similarities between
electricity and information technology
are even more striking. Both are what
economists call general-purpose technologies. … General-purpose technologies, or GPTs, are best thought of not as
discrete tools but as platforms on which
many different tools, or applications,
can be constructed. … Once it becomes
possible to provide the technology centrally, large-scale utility suppliers arise
to displace the private providers. It may
take decades for companies to abandon
their proprietary supply operations and
all the investment they represent. But
in the end the savings offered by utilities become too compelling to resist,
even for the largest enterprises. The
grid wins.” 4
technical Weaknesses
of the utility model
The Pace of Innovation. The pace of in-
novation in electricity generation and
distribution happens on the scale of
decades or centuries. 8 In contrast,
Moore’s Law is measured in months.
In 1976, the basic computational pow-
er of a $200 iPod would have cost one
billion dollars, while the full set of ca-
pabilities would have been impossible
to replicate at any price, much less in a
shirt pocket. Managing innovative and
rapidly changing systems requires the
attention of skilled, creative people,
even when the innovations are creat-
consistency and scalability at the same
time. The problem of scalable data stor-
age in the cloud with an API as rich as
SQL makes it difficult for high-volume,
mission-critical transaction systems to
run in cloud environments.
strengths of the utility model
Carr correctly highlights the concept
of a general-purpose technology. This
class of technology has historically
been the greatest driver of productivity
growth in modern economies. They not
only contribute directly, but also by catalyzing myriad complementary innovations. 3 For electricity, this includes the
electric lighting, motors, and machinery. For IT, this includes transaction
processing, ERP, online commerce and
myriad other applications and even
business model innovations.
Some of the economies of scale and
cost savings of cloud computing are
also akin to those in electricity generation. Through statistical multiplexing,
centralized infrastructure can run at
higher utilization than many forms of
distributed server deployment. One
system administrator, for example, can
tend over 1,000 servers in a very large
data center, while his or her equivalent
in a medium-sized data center typically manages approximately 140.7
illustration by stuart bradford
By moving data centers closer to
energy production, cloud computing
creates additional cost savings. It is far
cheaper to move photons over the fiber-optic backbone of the Internet than it
is to transmit electrons over our power
grid. These savings are captured when
data centers are located near low-cost
power sources like the hydroelectric
dams of the northwest U.S.
Along with its strengths, however,
the electric utility analogy also has
three technical weaknesses and three
business model weaknesses.
ed by others, unlike managing stable
technologies.
The Limits of Scale. The rapid avail-
ability of additional server instances is a
central benefit of cloud computing, but
it has its limits. In the first place, paral-
lel problems are only a subset of diffi-
cult computing tasks: some problems
and processes must be attacked with
other architectures of processing, mem-
ory, and storage, so simply renting more
nodes will not help. Secondly, many
business applications rely on consis-
tent transactions supported by RDBMS.
The CAP Theorem says one cannot have
utilization—a combination of strategic
importance and operational perfor-
mance that would negate any arguments
for shifting that load to a cloud vendor.
Ironically, even as the utility model is
being touted for computing, the highly
centralized approach is becoming less
effective for electricity itself: an emerg-
ing distributed power generation sys-
tem features smaller nodes running
micro-hydro, wind, micro-turbines and
fuel cells. What’s more, many enterpris-
es do in fact generate their own electric-
ity or steam, for the same reasons they
will continue to keep certain classes of
