Will utility computing reshape the way people do business?
Published: 21 Jun 2005 12:20 BST
"We do not think the computing industry will eventually resemble the electricity industry as an exact parallel, because unlike electricity, there are many more variables in terms of computing power that would need to be standardised," Lee said. "Computing will, however, become much more utility-like, both in terms of pricing and in terms of on-demand power."
In his piece, Carr theorises how the shift to utility computing could reshape the competitive forces in today's computing industry. He argues that leading "utility suppliers" of the future will either be today's large hardware providers, specialised hosting companies such as Digex, Internet outfits such as Google and Amazon, or as-yet-undiscovered start-ups.
Longtime computing industry executive Kim Polese, who is now CEO of open source start-up SpikeSource, said that Carr's competitive analysis should figure in the effect of open source and offshore development from emerging markets, both of which are causing "huge disruptions".
"This means to me that we can't assume that competition will come from the usual places," Polese said. "The leaders of tomorrow may not even exist today, but they could grow offshore from start-up into sizable companies quickly given the strong demand for their services. The computing utility services may be arbitraged across a network of service providers, of various sizes, with pricing developed via dynamic price discovery."
Microsoft, meanwhile, is well positioned to take advantage of any move to hosted services, said Bob Muglia, senior vice-president of Microsoft's Windows Server division.
"I think there will be a split. Companies will outsource things that can be very effectively run for an inexpensive price by others... On the other hand, I do think there will always be areas where people are putting in investment to drive business advantage that will either remain in-sourced or under very tight control of outsourcing — not purely hosted. There's a mixture of all these things," Muglia said. "We'll work well in both environments."
IBM's Ambuj Goyal, the general manager of IBM's Lotus division and former strategy executive of the firm's software group, fully buys into the notion of utility computing: He wrote a paper for IBM on the subject 10 years ago and offers hosted services for some Lotus products.
However, as with many discussions about the future, the reality is likely to lie somewhere between extreme positions.
"Rather than take a 50,000-foot view... you need to get down to earth and look at individual cases," Goyal said. "A standardised utility model has a role, but what a business should do depends on each particular case."
CNET News.com's Marguerite Reardon contributed to this article.
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