Cloud Computing

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Cloud computing is an emerging computing technology that uses the internet and central remote servers to maintain data and applications. Cloud computing allows consumers and businesses to use applications without installation and access their personal files at any computer with internet access. This technology allows for much more efficient computing by centralizing storage, memory, processing and bandwidth. Cloud computing is broken down into three segments: "applications," "platforms," and "infrastructure." Each segment serves a different purpose and offers different products for businesses and individuals around the world. In June 2009, a study conducted by VersionOne found that 41% of senior IT professionals actually don't know what cloud computing is and two-thirds of senior finance professionals are confused by the concept[ highlighting the young nature of the technology. In Sept 2009, an Aberdeen Group study found that disciplined companies achieved on average an 18% reduction in their IT budget from cloud computing and a 16% reduction in data center power costs.

Cloud Computing Segments

Applications: It's all On Demand

So far the applications segment of cloud computing is the only segment that has proven successful as a business model.[3] By running business applications over the internet from centralized servers rather than from on-site servers, companies can cut some serious costs. Furthermore, while avoiding maintenance costs, licensing costs and the costs of the hardware required to run servers on-site, companies are able to run applications much more efficiently from a computing standpoint.

On Demand software services come in a few different varieties which vary in their pricing scheme and how the software is delivered to the end users. In the past, the end-user would generally purchase a license from the software provider and then install and run the software directly from on-premise servers. Using an On-Demand service however, the end-user pays the software provider a subscription fee for the service. The software is hosted directly from the software providers' servers and is accessed by the end user over the internet. While this is the most common platform for On Demand software services, there are also some slightly different offerings which can be described as a hybrid of these two platforms. For instance, a program through which the end user pays a license fee, but then accesses the software over the internet from centralized servers is considered a hybrid service.

Who is Offering On Demand Software? - The companies below are already established in the On-Demand software or SaaS business. These companies charge their customers a subscription fee and in return host software on central servers that are accessed by the end user via the internet. (CRM)

Google (GOOG)
NetSuite (N)
Taleo (TLEO)
Concur Technologies (CNQR)
Info Technologies (IT)
Who is Offering Traditional Software? - The following companies have established themselves as traditional software providers. These companies sell licenses to their users, who then run the software from on premise servers. SAP AG (SAP)

Oracle (ORCL)
Blackbaud (BLKB)
Lawson Software (LWSN)
Blackboard (BBBB)
Many of the companies that started out providing On Demand application services have developed platform services as well. The platform segment of cloud computing refers to products that are used to deploy applications. Platforms serve as an interface for users to access applications provided by partners or in some cases the customers. Some examples included's platform, which allows subscribers to access their applications over the internet. NetSuite, Amazon, Google, and Microsoft have also developed platforms that allow users to access applications from centralized servers.

In July 2008, HP, Yahoo! (YHOO), and Intel (INTC) announced a joint cloud computing research project called the Cloud...
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