Is "cloud computing" enabling the next generation of information accessibility or simply a marketing campaign devised by technology companies to peddle more of what they are already selling? The answer lies somewhere between those extremes. Much of what makes cloud computing tick—the Internet, mobile computers, networked data storage, software housed in data centers and delivered over the Web, et cetera—has been available since the beginning of the dot-com era more than a decade ago. What is new, or at least more recent, is the greater variety of content that can be delivered online to a wider variety of gadgets.

What is cloud computing? Anyone who has watched a Netflix movie on a computer or smartphone or through a Nintendo Wii has used "the cloud." The same is true of anyone who has ever used Flickr or Dropbox to share photos, documents or videos. In the strictest sense, "the cloud" is a pool of information and services delivered via a public network. (Sounds a bit like the Internet actually.) Other definitions stipulate that the devices accessing this information have very little storage capacity and not much software, other than a Web browser and operating system.

Clouded meaning
The success of cloud computing as a marketing term has led technology companies to redefine and expand the definition to include most of what they already offer. Instead of a single cloud, companies such as, Google, HP, IBM and Microsoft sell services that enable customers to create their own private clouds walled off from the public. In this type of scenario, a "cloud" becomes synonymous with a "network" or possibly even an "intranet," which provides access to people with a password. Further confusing matters are services such as Apple iTunes, which require special software to be installed on a computer or smartphone in order to access music, movies and other content stored online.

Even Silicon Valley luminaries like Larry Ellison, CEO of software maker Oracle, have loudly criticized cloud computing as hype. Ellison pointed out in 2009 that "all it is is a computer attached to a network." (video) Ellison that same year also pointed out that "the computer industry is the only industry that's more fashion-driven than women's fashion." (video) Of course, this did not stop Oracle from later rolling out and marketing its own cloud computing offerings.

Regardless of how cloud computing is defined (and redefined), what makes it tick is access to scalable amounts of computing power, storage, networking bandwidth and other resources, unbeknownst to the person, say, using an iPhone to catch up on the latest TV programs via Hulu. In the past, the ability to requisition more or less data center resources as needed was called on-demand computing, utility computing or software as a service. Today, it is cloud computing, although the emphasis is still on economically managing the resources required to keep a network up and running.

Foot in the door
The availability of cloud services has been a boon to startup companies, which typically do not have a lot of money to spend on servers, storage devices or the people to manage these systems., which made its name as an online marketplace, has offered pieces of its data centers to other businesses (many of them startups) since 2006, when the company set up Amazon Web Services LLC (AWS). Netflix has since moved a large amount of internal infrastructure to AWS including key applications like its movie recommendations system, video transcoding, customer analytics and title selection queue, says Deepak Singh, an AWS senior business development manager.

AWS claims to have hundreds of thousands of customers, both large and startup-size, in more than 190 countries. AWS Simple Storage Service, for example, stores more than 339 billion online objects and peaks at more than 200,000 transactions per second. The primary benefit to Netflix, Dropbox, the European Space Agency (ESA), Yelp and other customers is that they are paying for exactly the computer resources that they use, whereas many in-house information technology departments are considered efficient if they are using more than 20 percent of their data center resources, Singh says.

Take down
Security and stability is always an issue when one company hands over its crown jewels (data, in particular) to another company. One danger is that the cloud service provider will crash, taking down customer Web sites with it. This happened to Amazon recently when the company reported outages at some of its North American data centers, prohibiting some customers from being able to access their data, disrupting service and even shutting down some customers' Web sites. Amazon fully restored its Elastic Compute Cloud (EC2) services within a few days. The problem was caused primarily by a network configuration change.

Despite the problems caused by the disruption to AWS's cloud services, the company maintains that it was able to throw more resources into fixing the issue than most companies operating in-house data centers. Such resources also extend to securing data against cyber theft, Singh says. "We often find that we can improve companies' security posture," he adds. "Our scale allows significantly more investment in security policing and countermeasures than almost any large company could afford themselves."

Silver lining?
Another knock against cloud computing—and data centers in general—is that they require a tremendous amount of electricity to keep their machines running. Greenpeace is capitalizing on cloud computing hype in its own way to promote its recent report entitled "How dirty is your data?" (pdf) In it, Greenpeace calls out several companies, including all of the major cloud service companies, plus Facebook and Twitter, for their massive Internet infrastructures.

Greenpeace reports that data centers running these infrastructures consume 1.5 to 2 percent of global energy demand (3 percent in the U.S.), growing at a rate of 12 percent yearly. "If the Internet was a country, it would rank 5th for the amount of electricity usage, just below Japan and above Russia," according to Greenpeace. "But unlike geographical states, the Internet's data centres [sic] can be found all over the world, clustering in locations that offer strong tax incentives and cheap, but often dirty, electricity."

Criticism of data centers as energy hogs fails to consider that these facilities often consolidate computer operations of dozens, if not hundreds, of companies that would otherwise be managing their own IT systems as opposed to simply not using computers, cloud computing advocates counter. "One of the reasons data centers are targeted for such complaints is that you centralize so much computing they start to consume megawatts of energy," says Yahoo chief technology officer Raymie Stata. Yahoo, which owns Flickr, provides infrastructure resources for studying cloud computing. But for every megawatt used by a data center out in the open, there is probably two or three times as much energy being used by computers spread out at different companies, he says, adding that at least in a data center several computers can be consolidated onto a single server and new energy-efficient approaches to cooling those servers can be developed.