Cloud Computing: What Are the Barriers to Entry and IT Diseconomies?

Oct. 19, 2008 7:19 AM ETGOOG, VMW, FFIV, CSCO, RVBD, MSFT4 Comments
Gregory Ness profile picture
Gregory Ness

Cloud computing has become a reality, yet the hype surrounding cloud has started to exceed the laws of physics and economics. The robust cloud (of all software on demand that will replace the enterprise data center) will crash into some of the same barriers and diseconomies that are facing enterprise IT today.

Certainly there will always be a business case for elements of cloud, from Google’s (GOOG) pre-enterprise applications to Amazon’s (AMZN) popular services and the powerhouse of CRM, HR and other popular cloud services. Yet there are substantial economic barriers to entry based on the nature of today’s static infrastructure.

We’ve seen this collision between new software demands and network infrastructure many times before, as it has powered generations of innovation around TCP/IP, network security and traffic management and optimization.

It has produced a lineup of successful public companies well positioned to lead the next tech boom, which may even be recession-proof. Cisco (CSCO), F5 Networks (FFIV), Riverbed (RVBD) and even VMware (VMW) promise to benefit from this new infrastructure and the level of connectivity intelligence it promises. (More about these companies and others later in this article.)

Static Infrastructure Meets Dynamic Systems and Endpoints

I recently wrote about clouds, networks and recessions by taking a macro perspective on the evolution of the network and a coming likely recession. I also cited virtualization security as an example of yet another big bounce between more robust systems and static infrastructure that has slowed technology adoption and created demands for newer and more sophisticated solutions.

I posited that VMware was a victim of expectations enabled by the promise of the virtualized data center muted with technological limitations its technology partners could not address quickly enough. Clearly the network infrastructure has to evolve to the next level and enable new economies of scale. And

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Gregory Ness profile picture
Greg Ness is senior director of Infoblox ( He was previously the vice president of marketing at Blue Lane Technologies and a marketing executive at Juniper Networks, Redline Networks, IntruVert Networks, ShoreTel, Visa International and Verizon. At Redline he helped to establish the company as a leader in Web application delivery until acquisition in May 2005 by Juniper Networks. At IntruVert he helped the company establish and lead the IDPS category, resulting in its acquisition by McAfee. At ShoreTel he helped the company establish itself in the emerging enterprise VoIP space. Greg has been a blog columnist on application delivery, networking and security since 2004. His personal blog is: ( Greg has a Bachelor's Degree from Reed College and a Master's Degree from The University of Texas at Austin.

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