The Cloud Parties Like It's 1989

by: Dana Blankenhorn

According to Joshua McKenty, who helped lead NASA's Nebula cloud project before it became the basis of OpenStack, cloud is the next secular change in computing.

First came mainframes, then PCs, then Internet, and now cloud.

That's a big claim, and reason enough for lots of companies, from Citrix (NASDAQ:CTXS) to Rackspace (NYSE:RAX) to VMWare (NYSE:VMW) to Red Hat (NYSE:RHT) , to launch a "cloud OS" and become the Microsoft of this hot new computing platform.

Trouble is, says McKenty, a cloud isn't a PC. It isn't even the Internet. It's something much more complex, more like the mainframe technology that nearly destroyed IBM in the mid-1960s.

What the System 360 problem taught people like Frederick Brooks, who worked on the project and later wrote his classic The Mythical Man-Month based upon it, is that big problems don't respond to brute force. Adding engineers to a corporate project can actually slow progress, as each new employee must be trained and supervised before delivering productivity.

The solution, says McKenty, is the open source process that produced Linux. It took Linux decades to achieve data center dominance, and it worked because many different teams came at problems from many different directions, each contributing a little to the larger whole. That's why McKenty based pentOS, from his Piston Cloud start-up, on OpenStack, an open source project, and makes no claims of it being "the" solution to the cloud problem.

The problems holding back cloud are some any Internet user is familiar with. Proving your identity. Gaining authentication. Policy management. Making these things painless, automated and seamless are preconditions to major enterprises building clouds they will bet their companies on. It was in search of answers to those problems that Nebula was moved to OpenStack, because governments are enterprises that can take full advantage of a complete cloud solution.

What does this mean for investors? It means that, in the near term, public cloud companies like Amazon (NASDAQ:AMZN), Google (NASDAQ:GOOG), and Rackspace are the place to play. Place your bets here based on costs - the most efficient cloud wins.

It also means that enterprise software companies like Oracle (NASDAQ:ORCL), SAP (NYSE:SAP) and IBM (NYSE:IBM) have time to adjust, as do HP (NYSE:HPQ) and Dell (NASDAQ:DELL). Place your bets here based on a real commitment to the open source process, he says.

Despite all the current hype concerning cloud, McKenty concludes, this isn't 1994, the year the Web was spun. This is more like 1989, when companies like UUNet defined connectivity, when CompuServe defined services, and when things like America Online were considered leading-edge. None really survived the Internet revolution, and betting on any of them beforehand would have guaranteed you nothing.

When the solutions are available, and McKenty thinks they're more likely to come from the open source process of OpenStack than the silo of any proprietary (or semi-proprietary vendor) then the real cloudburst can start.

Not before.

Disclosure: I am long GOOG, AMZN, IBM, DELL.