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Is the cloud becoming another tech bubble that's bound to burst?

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With all the exuberance over cloud lately (some might say irrational exuberance), and all the expectations, do you think cloud is becoming a tech bubble that's going to burst?

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  • Clouds are not a technology bubble – there is real and tangible performance, scalability and cost savings that are being realized today. What will happen is that there will be natural consolidation in the space with underfunded companies falling short of revenue velocity required to satisfy their investors that in turn, will create a round of ‘consolidation'. That is to be expected.

    Another speed bump will be vendor cloud washing, where companies of all shapes and sizes try will market their existing offerings in a public or private cloud, without changing their underlying architectures or licensing models. The marketplace will sort through the “hype? and quickly vote with their dollars to support the vendors that actually do “get it?.

    It is not a “bubble? when real value, cost savings and faster time to value is substantiated and documented.

    CIO’s are asking themselves everyday if the next application or service is bettered delivered with internal investments in IT infrastructure and resources or in a “cloud?. When the answers are documented in real in capabilities, flexibility real cost savings, you have a legitimate market.

  • I agree with Dyke. I would say that cloud computing is closer to being the new paradigm than being a bubble that is "bound to burst." The cloud/SaaS market has being maturing over the last 8-10 years at a steady clip. Growth has accelerated recently but that is more do to infrastructure etc, catching up.

  • Although some may be tired of all the attention cloud computing is receiving, many more are already experiencing the quick and measurable benefits which cloud services are already delivering. As a result, a wider assortment of organizations are exploring and adopting a wider array of cloud services. In response to this trend, the cloud computing industry is maturing from a 1.0 world of point solutions to a 2.0 environment of multi-dimensional enterprise quality services. This maturation process will ensure that the cloud 'bubble' doesn't burst.

  • Dyke nailed it on the head - all markets go through natural cycles of growth, consolidation, and maturation. Although the cloud market seems to be hot, I think what will prevent this from becoming a bubble is the lack of available investment capital...whereas in 1998 when every startup I interviewed with in SF was "pre-IPO," the cloud startups today are happy to have enough runway to get them through this ugly economic period. We've already seen some level of consolidation, led by IBM, CA, and other established players, but I think we're still years from the cloud market as a whole maturing, and even then I think we'll see a number of distinct markets within the cloud ecosystem with varying rates of maturation. And to Jeff's point, the move to the "Cloud 2.0" way of thinking within enterprises will ensure that there is enough diversification within cloud services to ensure that no one segment will create significant exposure for others within the space.

  • No Cloud Computing is not another bubble. The reason that it is that it is a better model than previous models, at least for Home Users and SMBs:
    It does not require that non-IT professionals, which are not very young, will handle complex technical management operations such as installing applications, upgrading applications, running backups etc.
    The second reason which supports that model is Availability. Your applications and data are availability is not lacaton and specific computer dependent.
    The two reasons cited above make sense in Business and Real Life context, beyond Information Technology perspective, therefore the Cloud model will be gradualy a Mainstream model.

  • I dont like the question...By saying is this a tech "bubble" it implies that it potentially will fail or is failing in its current format....Cloud computing is a methodology and shouldnt be seen as an implementation (if that makes sense).

    Some talk is far too exuberant with regards to what the cloud can deliver in terms of scalability, cost and even performance. I think what we will see in the near future consolidation of cloud providers and the way in which "clouds" are implemented. I also believe we will see a clear definition of what is viable for organisations to use cloud computing for, and for what requirements cloud computing should be ignored....

    At the moment far too many people are just coming to grips with cloud computing and like all newish concepts, people engage with it sometimes for the right, and sometimes for the wrong reasons and requirements....

  • Whether cloud adds value or not, has nothing to do with whether it will be a tech "bubble" or not. Frankly, there are many characteristics that are similar to the ones of the 2000 timeframe. Many companies are starting up and they do not have a clear business model. Many "cloud" and "web 2.0" services are for free, and companies are burning cash fast. Key companies will survive, but many will be dragged down in exactly the same way as it happened 10 years ago. The main difference is that venture capitalists are more cautious and that the "cloud" model allows companies to start with little assets (except for the IaaS providers). We see the initial stages of M&A activities already, the rest will follow, don't worry.

  • We do not feel cloud is going to be a tech bubble. As with everything else there is a lot of hype and uncertainty. But most of this uncertainty is around how to leverage the cloud and not around why cloud and this is the key difference. Also the “as a service model? has had several years of history, therefore people have learnt quite a few lessons around “software as a service? delivery model.

    Finally, there will be failures if cloud is used for products and projects that are not suitable or there is no ROI. But the failures will not be on scale that might result in bursting of a bubble, these failures are needed to refine the methodology and are essential to curtail the hype.

  • Its a bubble and will burst - There will be 2-3 winners like the SalesForce.com and Amazon's of the world just like companies like Google came out winners out of the dot com bust.

    - The benefits for the demand side are probably justified right now because IT teams would probably prefer Operational expenses instead of Capital expenses upfront especially till Cloud services are cheap or almost free. But looking at the larger picture, some people paint a picture that most of hardware capacity in IT systems are wasted right now and Cloud will magically solve such under utilization - there are companies right now which still make excellent use of their internal infrastructure with shared services and apps

    - Also, enterprise applications and data services are not one dimensional like Electricity which some people tend to project.

    - For Cloud vendors, the business model is really high capex, low margins with huge security and data liabilities - not a great business model. Some will survive due to scale but most will close down.

    - Cloud is probably good for SMBs who cant afford their own IT - so that side of things like probably look good - Fortune 500 companies will shy away from putting important information in the cloud - atleast if they consider data as an asset.

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