By Rich Wellner
There is a controversy in the cloud community today about whether the market is going to be one based on value or price. Rephrased, will cloud computing be a commodity or an enablement technology.
A poster on one of the cloud computing lists asserted that electricity would be a key component of pricing. He was then jumped on by people saying that value would be the key.
It seems like folks are talking past one another.
His assertion is true if CC is a commodity.
Now that said, there are precious few commodities in IT. Maybe internet connectivity is one. Monitors might be another. Maybe there are a few more.
But very quickly you get past swappable components that do very nearly the same job and into the realm of 'stuff' that is not easily replaceable. Then the discussion turns to one of value.
Amazon recognized the commodity of books and won the war over people who were trying to sell value. They appear to be attempting to do the same with computer time, which makes the battle they will fight over the next few years with Microsoft (and the increasing number of smaller players) extra interesting.
There is also the problem of making sweeping statements like "the market will figure things out". There is no "the market". Even on Wall Street. The reason things happen is because different people and institutions have different investment goals. Those goals vary over time and create growing or shrinking windows of opportunity for other people and institutions.
I've made my bet on how "the market" for cloud computing will shake out in the short to medium term. Now I'm just hoping that there are enough of the people and institutions my bet is predicated on in existence.
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