The Anti-Buzz: The cloud is very abstract, but very real.
According to some, “the cloud” is yet another tech-bubble. I wanted to address this claim, but I realized that the audience here would probably prefer a primer on what the cloud is and isn’t before I wax philosophic on speculation bubbles again. Cloud-computing is a particularly nasty buzzword in the sense that it feels very hype-driven, all flash and no substance. This is because the concept of cloud-computing is very abstract, and so it is easy for the idea to feel empty.
A number of readers would probably love a more concrete explanation of the cloud. Well, one doesn’t exist. If your notion of the cloud is vague, that’s because the cloud is a vague notion. I think the best way to describe the cloud is simply that it is the observation that most computer users have access to high-speed Internet, access to multiple computers, and are comfortable using the Internet as a resource. If that doesn’t sound exciting, understand that it is a pretty good catch-all. The advent of the Internet has shown us what happens when there are no barriers on our information. The cloud is the next step: removing all barriers from our activities. The Internet proved itself by doing certain things very well, but for a time there was still a partition between “things I do with my computer” and “things I go to the Internet for.” The cloud is the removal of that distinction. All things you do on your computer are things you can go to the Internet for.
When “the cloud” is simply a matter of centralized data storage, the implications are easy to trace. Among the earliest implementations of cloud-based services was webmail – gmail, yahoo, hotmail, etc. Your e-mail isn’t on your computer, it is stored online, associated with your account, which you access from any browser. The advantages of being able to access and manage your e-mail from any computer with Internet access were apparent even in the late 90s when these services first appeared.
As more complex cloud-based services appear, the implications of cloud computing become harder to guess at. E-mail is easy to grok because each person has a unique, individual collection of e-mail – your webmail account really is storing your e-mail online. But what about repeatable information? What about access? If you pay for a subscription to a news site, you are paying for access. This too is easy to follow, but less obvious is that something like iTunes or the Kindle store are actually subscription services too. Amazon doesn’t copy an eBook for each person that buys it – that would be silly. All they need to do is track who “owns” the book, and then they allow access to the one master copy. The ramifications of this model are hard to guess at right now: it challenges our traditional ideas of ownership and property.
Even less obvious is software as service. My go-to example continues to be Prezi, but googledocs have been the more prescient example – you don’t need to install a word processor, you can just borrow one from the Internet. The takeaway is that this stuff is still emerging, and that we can’t know what the implications are for traditional software, but it’s hit buzzword status. The cloud has arrived. From iTunes to app stores to webmail to flickr to googledocs, it’s clear this is the way forward.
Which brings me full circle back to the impetus of this conversation: Is the cloud another tech bubble? A full exploration of this question will wait for next week, but for now we need to recognize some key features of a tech bubble. A common misconception is that if there is a tech X bubble, then tech X is a fad and not worth investing in. Quite the opposite. If tech X hadn’t already proven its importance, then there wouldn’t be a bubble in the first place. As I said about social media, the new tech paradigm is here to stay, what remains uncertain is exactly how it will impact society and which companies will come out on top. A bubble is a lose-lose investment scenario – tech X is too obviously ripe to risk no investment, but too poorly understood to inform wise investment. Cloud-computing fits this description: An obvious paradigm shift that can’t be ignored, but too poorly understood to be mastered by everyone.
The deeper question is: where are the large investments that risk large failure? You can’t have a bubble without risky investment, and the landscape is not littered with overvalued cloud start-ups. So is there a cloud tech bubble? Join me next week for a closer look at the risk-takers.