Microsoft recently announced that a ‘lightweight’ web version of Office, which will include programmes such as Word and Excel, is currently in the works. It’s a significant move by the software giant. In 2007, Office generated around $19 billion for the company, almost a third of its total revenue. But it’s just the latest example of a paradigm shift towards cloud computing.

Software and files are traditionally stored on a user’s own desktop or a local server. Cloud computing, also known as software as a service (SaaS), instead stores resources remotely and delivers them over the internet. Data and services can then be accessed from any computer, irrespective of location or even operating system. All you need is a web connection.

As Microsoft’s announcement demonstrates, the cloud will play an ever-increasing role in how we use computers. Dell even tried to trademark the term ‘cloud computing’ recently but its application was rejected in August. The company did manage to secure the URL cloudcomputing.com though.

Many people engage in cloud computing without even realising it. At its simplest, it includes such ubiquitous online applications as Hotmail (which has been around since 1996), Flickr and YouTube.

At the other end of the scale, cloud computing allows companies to outsource their entire IT infrastructure. Amazon’s Elastic Compute Cloud (EC2) provides scalable capacity run on Amazon’s servers: you just pay for whatever storage you use. It powers Amazon’s own websites along with tools as diverse as the New York Times’ online archive and Twitter. Similar services include the UK-based Flexiscale, which is aimed at web 2.0 start-ups.

Microsoft (yes, them again) will launch cloud operating system Azure at the end of the year, while IBM introduced a swathe of cloud-based services in October. These include a collaboration and social networking application for businesses called Bluehouse. And only last month, Google revealed a new project called Native Client, which aims to enable more powerful web applications.

It’s easy to see why cloud computing – in all its forms – continues to gain momentum. Users can work anywhere and, if your computer breaks or your laptop is stolen, you won’t lose any data. Its scalability means you only pay for the resources you need. The cost and hassle of maintaining lots of computers and software is someone else’s responsibility. And the economies of scale offered by the cloud mean that services can be made available at lower prices.

But cloud computing faces fierce opposition from some people, who question the level of data security and privacy it provides. Free software advocate Richard Stallman compares using web applications to do your computing to using proprietary programs. “If you use a proprietary program or somebody else’s web server, you’re defenceless,” he told The Guardian. “You’re putty in the hands of whoever developed that software.”

Equally, server outages can be hugely problematic. In February, Amazon’s Simple Storage Service went down, locking users out of their own data. A server error affecting Apple’s MobileMe in July meant that an estimated 20,000 users were unable to access email for two weeks. There’s also the simple fact that cloud computing doesn’t work if you can’t get online (although Google Gears, which acts like a very rich browser cache, is one project that is trying to address this).

But cloud computing is a natural extension of web 2.0‘s shift towards how much of our professional and personal lives take place online. We’ve already passed the point at which the cloud has become an everyday aspect of IT: in the US, over two-thirds of web users make use of cloud-based applications. Perhaps the answer to critics such as Stallman is that it’s important to have a choice of clouds, not just ones that are operated by multinational corporations.

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