Cloud computing's potential is reflected in highflying stocks of companies actively involved. Stumbling blocks include security concerns and confusion about what the cloud really is.

Technology investors have their heads in the cloud these days.
Cloud computing, which supplies on-demand hosted services over the Internet, requires only that its clients have a computer and Internet access. It handles the functions traditionally performed by a firm's in-house hardware and software.

The global cloud-computing market is expected to reach $241 billion in 2020, up from $41 billion in 2010, according to Forrester Research. That long-term potential is reflected in the highflying stocks of companies actively involved in the concept.
A stumbling block, however, is concern over the security of data when a client firm can no longer control it on its own premises. Hackers and crashed systems are, after all, among a company's worst nightmares.
And while the cloud is a definite boon to smaller firms, more established companies have already made significant investments in equipment and staffing. There is also confusion over what cloud computing really is and who provides it.
The field's successful pioneer is Salesforce.com Inc., a well-managed company that over the last decade effectively introduced this cost-saving business model. It offered a monthly subscription service that allowed firms to simply go to their Web browsers, point to salesforce.com and begin using it. That turned out to be a good financial deal for its clients as well as for its shareholders.
Continuing to add applications as it also improves its existing service to nearly 100,000 clients, Salesforce.com has potential to significantly increase international revenues. Although its early start and brand recognition have made it the vendor of choice for firms looking to cut IT costs, future competition is expected to intensify.
"Cloud computing lets a company build scale very quickly without a lot of capital investment and maintenance costs, because you don't need an entire information technology department," said Ryan Issakainen, exchange-traded fund strategist with First Trust Advisors in Wheaton, Ill. "It makes it possible to build a more 'a la carte' data solution for a business."
His firm's new First Trust ISE Cloud Computing ETF has a stock portfolio of 40 companies, some of which might be considered risky as individual stock purchases. More than half of its holdings are "pure play" cloud computing firms, with the remainder being large technology conglomerates or cloud "enabler" firms providing support and software.
Examples of strong-performing pure plays in the portfolio include:
• Aruba Networks Inc., a provider of wireless networking equipment for large, sprawling organizations that permits secure access for employees wherever they work or roam. Its 14,000 customers include government, industry and universities. With its high profit margins and growth prospects, it could become a takeover target.
• TIBCO Software Inc., a software company focused on service-oriented tools such as business process management, is noted for strong technology, innovative new products and customer relationships. It has made key acquisitions and could be attractive as a candidate for an acquisition.
• Teradata C, which provides data warehousing and analytics for global organizations through bundled software and hardware, was spun off from NCR Corp. in 2007. Its clients tend to have high IT budgets. It should benefit from growth in data volume and continued expansion of its sales territories, though it does face rivals with deeper financial pockets.
"While the topic of cloud computing is not new, there still is a lot of confusion in the market because so many things called cloud computing really are not cloud computing at all," cautioned Holger Kisker, principal analyst with Forrester Research in Boston. "A number of vendors call everything 'cloud,' and we would call this 'cloud washing.' "
Old-line, cash-rich technology giants that effectively incorporate the cloud concept will play a significant role and profit from it as well.
While the cloud threatens the desktop-based Office franchise of Microsoft Corp., the company's Azure cloud computing platform should help customers easily make the transition into this new technology, he said. Microsoft made an early and earnest move that is expected to provide high returns on invested capital while it still profits from current products.
Kisker expects Google Inc. and Amazon.com Inc., among other tech mainstays, to be strong players in the cloud. Issakainen would add Apple Inc. and expects there will be others as well.
Experts say it is important to differentiate between the two distinct types of cloud.
"The 'private' cloud is the new term now being used for existing enterprise data centers," said Sunit Gogia, senior equity analyst with Morningstar Inc. in Chicago. "But what most people are really thinking of is the 'public' cloud, which is when a company uses a third-party provider for cloud computing's shared resources, such as infrastructure and shared management."
Issakainen, Kisker and Gogia all admire the success and stock potential of Salesforce.com because it provides applications to small businesses that were unable to afford them before. It turned total "non-consumers" of a service into consumers.
"It takes some time to get used to having data being outside of a company's control," Gogia said. "But I do think that this model will gain more traction with larger enterprises over time."
In the long run, the money-saving aspect of cloud computing will spur its growth and provide profits for investors — so long as security issues can be addressed.

Originial article by Andrew Lecky found here.

SAN FRANCISCO, April 11, 2011 /PRNewswire/ -- Heroku, the leading Ruby platform as a service (PaaS), today announced it is extending its partner ecosystem to accelerate the availability of top, highly qualified technical expertise and resources to the exploding number of businesses choosing Heroku's Ruby cloud application platform.  The Heroku Partner Program is designed to help systems integrators, consultants, and design firms that are using Heroku to meet growing client demand for full-featured and scalable web, mobile, and social applications.  Over fifty technology businesses are participating in the program, including global systems integrator Accenture and top agile development firm Pivotal Labs.

"Our clients see great value in the cloud. This includes using cloud platforms to rapidly bring social and mobile experiences to their customers," said Paul Daugherty, Chief Technology Architect at Accenture. "Ruby and Heroku's tremendously popular cloud application platform are enterprise-ready and Accenture can use it to deliver value to our clients today."

"Our clients count on us to deliver solid, scalable and innovative web applications, leveraging our deep experience in Ruby on Rails and Agile development. The Heroku partnership enables Pivotal to drive more customer value by minimizing time spent on operational questions," said Rob Mee, CEO at Pivotal Labs. "PaaS has fundamentally changed how we develop, deploy and scale applications. Heroku lets our clients treat operations as a solved problem, enabling us to focus on delivering differentiated value in their products."

Companies combine technologies to create end-to-end order management, accounting and e-commerce solution

Linvio, Inc. and FinancialForce.com today announced the integration of Linvio’s PaymentConnect ecommerce framework with FinancialForce Accounting on Force.com, the cloud computing platform from salesforce.com. This combined solution creates the only native end-to-end order management, accounting and e-commerce solution for salesforce.com customers.

The FinancialForce application provides Salesforce users with comprehensive accounting functionality, while PaymentConnect adds support for managing e-payments, building payment-based workflow automation, and integrating services provided by PayPal, Google Checkout, Authorize.Net and RBS Worldpay. Combined, these products connect invoicing to online payment and record processed payments against entries in the general ledger. The PaymentConnect framework also includes modules from Linvio and various third-party ISVs that provide out-of-the box support for Force.com-integrated shopping carts, event management, software license management, and non-profit donation management.

SAP AG must pay $1.3 billion to rival Oracle Corp. for copyright infringement, a federal jury ruled Tuesday, following a high-profile court battle between the business-software makers.

The eight-person jury reached the verdict a day after it adjourned to deliberate. The companies presented closing arguments Monday in U.S. District Court in Oakland, Calif.

Salesforce.com (CRM) is a cloud-based provider of customer relationship management services. Its applications can be customized and integrated with other software applications and are sold on a subscription basis. The company’s offerings have quickly become a ubiquitous sight at offices around the world, and shares have had no problem reflecting the situation. Now trading at nearly 250X TTM EPS, CRM is among the highest of the high-flyers in today’s market landscape.

Earnings: 3Q profit excluding one-time items of $21.1 million ($0.32/share) versus 3Q09 profit of $20.7 million ($0.28/share).

Revenue: Up 30% YOY to $429.1 million.

There was a time when data was a passive thing; it took time to look through and by the time you had done the analysis, the world had moved on and it was kind of outdated. With advances in computing power, we are now about to enter a new phase in which data, instead of being a component of dusty old reports, is the new gold of business advantage. The faster and more powerful your computer and servers, the faster it can crunch and analyze the data and therefore the quicker you have real information you can act on.
If you take data from multiple sources, look for correlations and key patterns that takes computing power, but if your computers are fast enough, and they are now, you have something.
Here's John Webster on Cnet talking about IBM's recent acquisition of Netezza.

"But, beyond the short-term tactical aspect of the Netezza acquisition is a longer-term positioning of IBM that is far more significant. Traditional data warehousing--as a relatively slow process that depends on reiterative data extract, transform, and load (ETL) processes--is essentially dead. What customers are now looking for is speed to information. These appliances offer the ability to parse large data sets from multiple sources in a nontraditional ETL way and to produce information in real or near real time.

That, in itself, is a big opportunity. But it gets even bigger when one looks at what these systems are doing as compared with the human brain. Our brains take in massive streams of sensory data and makes the necessary correlations that allow us to know where we are, what we're doing, and ultimately what we're thinking--all in real time. That's the same kind of data processing these appliances are after.

It's not often we get to watch a new style of computing emerge and grow. But that's what I think we're now seeing. Or...translating what I've said so far into analyst-speak: these appliances represent the emergence a new computing paradigm that mimics the functioning of the human brain. Driving the race to the business analytics appliance opportunity is a race to real-time, competitive business information."

So we've are close to a stage where real-time business intelligence meets real-time behavioral understanding and the net result is something akin to a force of nature.

This is going to turn the marketing world upside down and make digital much more important than it currently is.

 Just found this video through Twitter (thanks @explainnation!)...  While it doesn't go into much detail on how Appirio works, it does a great job at explaining what Appirio does...  I loved the animation and it's funny to boot (the "plumbers" are classic).  

Also, in case you'd like to learn more about Appirio and the issues they address, here's a piece we did with Narinder Singh, CMO and Co-founder of Appirio, at the All About the Cloud event earlier this year:

DreamSimplicity is proud to announce itself as a media sponsor for the UP 2010, being held November 15 - 19.  This is the inaugural year for what will surely prove to be one of the premiere virtual conferences for the Cloud Computing community.  

Here at DreamSimplicity we're all about furthering the adoption of SaaS and Cloud Computing...  To that end we've partnered with some of the industries leading events and we're proud to add UP 2010 as the latest conference we've identified as one of this year's do-not-miss events.  What we love about this event is that it takes to heart some of the core principals of Cloud Computing - it's virtual!  That's right... No packing, airlines, security check points, or taxi's...  Just browse to up-con.com and log in...  Sound familiar?  

But in addition to the virtual component, UP is addressing the needs of those people and companies that want to make a more personal connection with partners and prospects by offering a traditional conference to be held in San Francisco, as well.  The main event will be the UP Start Cloud Awards!  being offered in partnership with PricewaterhouseCoopers.

Google is bringing Android software development to the masses.

The company will offer a software tool, starting Monday, that is intended to make it easy for people to write applications for its Android smartphones.

The free software, called Google App Inventor for Android (http://appinventor.googlelabs.com/about/), has been under development for a year. User testing has been done mainly in schools with groups that included sixth graders, high school girls, nursing students and university undergraduates who are not computer science majors.

A new network design that avoids the need to convert optical signals into electrical ones could boost capacity while reducing power consumption.

The heart of the Internet is a network of high-capacity optical fibers that spans continents. But while optical signals transmit information much more efficiently than electrical signals, they’re harder to control. The routers that direct traffic on the Internet typically convert optical signals to electrical ones for processing, then convert them back for transmission, a process that consumes time and energy. 

In recent years, however, a group of MIT researchers led by Vincent Chan, the Joan and Irwin Jacobs Professor of Electrical Engineering and Computer Science, has demonstrated a new way of organizing optical networks that, in most cases, would eliminate this inefficient conversion process. As a result, it could make the Internet 100 or even 1,000 times faster while actually reducing the amount of energy it consumes.

One of the reasons that optical data transmission is so efficient is that different wavelengths of light loaded with different information can travel over the same fiber. But problems arise when optical signals coming from different directions reach a router at the same time. Converting them to electrical signals allows the router to store them in memory until it can get to them. The wait may be a matter of milliseconds, but there’s no cost-effective way to hold an optical signal still for even that short a time.

Chan’s approach, called “flow switching,” solves this problem in a different way. Between locations that exchange large volumes of data — say, Los Angeles and New York City — flow switching would establish a dedicated path across the network. For certain wavelengths of light, routers along that path would accept signals coming in from only one direction and send them off in only one direction. Since there’s no possibility of signals arriving from multiple directions, there’s never a need to store them in memory.

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To some extent, something like this already happens in today’s Internet. A large Web company like Facebook or Google, for instance, might maintain huge banks of Web servers at a few different locations in the United States. The servers might exchange so much data that the company will simply lease a particular wavelength of light from one of the telecommunications companies that maintains the country’s fiber-optic networks. Across a designated pathway, no other Internet traffic can use that wavelength.

In this case, however, the allotment of bandwidth between the two endpoints is fixed. If for some reason the company’s servers aren’t exchanging much data, the bandwidth of the dedicated wavelength is being wasted. If the servers are exchanging a lot of data, they might exceed the capacity of the link.

In a flow-switching network, the allotment of bandwidth would change constantly. As traffic between New York and Los Angeles increased, new, dedicated wavelengths would be recruited to handle it; as the traffic tailed off, the wavelengths would be relinquished. Chan and his colleagues have developed network management protocols that can perform these reallocations in a matter of seconds.

In a series of papers published over a span of 20 years — the latest of which will be presented at the OptoElectronics and Communications Conference in Japan next month — they’ve also performed mathematical analyses of flow-switched networks’ capacity and reported the results of extensive computer simulations. They’ve even tried out their ideas on a small experimental optical network that runs along the Eastern Seaboard. 

Their conclusion is that flow switching can easily increase the data rates of optical networks 100-fold and possibly 1,000-fold, with further improvements of the network management scheme. Their recent work has focused on the power savings that flow switching offers: In most applications of information technology, power can be traded for speed and vice versa, but the researchers are trying to quantify that relationship. Among other things, they’ve shown that even with a 100-fold increase in data rates, flow switching could still reduce the Internet’s power consumption.

Growing appetite

Ori Gerstel, a principal engineer at Cisco Systems, the largest manufacturer of network routing equipment, says that several other techniques for increasing the data rate of optical networks, with names like burst switching and optical packet switching, have been proposed, but that flow switching is “much more practical.” The chief obstacle to its adoption, he says, isn’t technical but economic. Implementing Chan’s scheme would mean replacing existing Internet routers with new ones that don’t have to convert optical signals to electrical signals. But, Gerstel says, it’s not clear that there’s currently enough demand for a faster Internet to warrant that expense. “Flow switching works fairly well for fairly large demand — if you have users who need a lot of bandwidth and want low delay through the network,” Gerstel says. “But most customers are not in that niche today.”

But Chan points to the explosion of the popularity of both Internet video and high-definition television in recent years. If those two trends converge — if people begin hungering for high-definition video feeds directly to their computers — flow switching may make financial sense. Chan points at the 30-inch computer monitor atop his desk in MIT’s Research Lab of Electronics. “High resolution at 120 frames per second,” he says: “That’s a lot of data.”