some number of end customers, providing economies of scale at the computing and services layers

˲ ˲ Abstracted infrastructure. The cloud end customer does not know the exact location or the type of computer(s) their applications are running on. Instead, the cloud provider provides performance metrics to guarantee a minimum performance level.

˲ ˲ Little or no commitment. This is an important aspect of today’s cloud computing offerings, but as we will see here, interferes with delivery of the services the enterprise demands.

stack. The end customer is purchasing the use of a working application. Some examples of this are NetSuite and SalesForce.com. (This service is not the focus of this article.)

illustration by gary neill

service models

Cloud is divided into three basic service models. Each model addresses a specific business need.

Infrastructure as a Service (IaaS).

This is the most basic of the cloud
service models. The end customer
is purchasing raw compute, storage,
and network transfer. Offerings of this
type are delivered as an operating sys-
tem on a server with some amount of
storage and network transfer. These
offerings can be delivered as a single
server or as part of a collection of serv-
ers integrated into a virtual private
data center (VPDC).

Perfect competition Determines cloud Pricing strategies In our experience providing cloud services, many of the current cloud end customers use price as their primary decision criteria. As a result, service providers’ offerings tend toward a least common denominator, determined by the realities of providing cloud service at the lowest possible price. At the same time, the cloud computing market is becoming more crowded with large providers entering the playing field, each one of which trying to differentiate itself from the already established players. The result of many pro-