When Everyone Has a Cloud

NEW YORK (TheStreet) -- The history of technology will record this as the third year of the cloud era, which is why I'll spend next week at the Red Hat Summit in Boston, learning about what's new in the clouds.

The idea of the cloud has triumphed across the industry. Every major vendor has a cloud strategy. Data centers are going up as fast as fiber lines were buried back in the 1990s. Despite a gradual falling to Earth among vendors like Red Hat (RHT) and VMWare (VMW), caused by growing competition, this remains a boom time for cloud.

However few have stopped to consider the implications. What does it mean for business when everyone has a cloud?

• You need fewer local resources. Storage is no longer done locally and most database processing is off-loaded as well.
• Big jobs are done fast. Back in the late 20th century there was a project called Seti @ Home, which offered users screen-savers behind which their CPUs analyzed data sets from radio telescopes. That was "distributed computing," a standard feature of the cloud.
• Computing can become ubiquitous. Chip companies seeking new markets will now put networked intelligence into everything you buy.
• Orwellian fears will grow. Having networked intelligence everywhere leads some to demand absolute security and others absolute privacy, a false choice that becomes increasingly political over time.

These are the obvious choices, but what are the investment choices?

1. Our local computing environment becomes more Apple (AAPL)-like, more tied to devices, less wired.
2. Facebook (FB) and Google (GOOG) are both services. Services become more central than products such as those from Microsoft (MSFT).
3. Density will grow. As our world becomes more virtual our desire for human contact will increase. Cities gain over suburbs. The development model becomes the university campus, not the skyscraper village. As services like Amazon.com (AMZN) make shopping and consuming more virtual, this becomes more obvious.
4. Change will accelerate. Breakthroughs happen even faster. Problems that once seemed intractable, like energy, suddenly become soluble.

When intelligence is everywhere there is actually a premium placed on the human mind. Right now that means programmers, who still do their work by hand, are in high demand. The greatest breakthrough one company can make will be in the automation of computer programming, which still improves at an arithmetic pace while technology improves at a geometric one.

I know all this sounds frightening to some people, but business adapts quickly to change, and free people in free enterprises adapt more quickly to change than others.

There's a great game you can play whenever you watch a movie from the last 50 years. You can date it quite precisely once you see someone interfacing with technology. Do you hear typewriters? It's the 1970s. Are they using a PC? It's the 1980s. A cell phone? Probably the 1990s. A smart phone? The 2000s. The adaptation of characters to technology mirrors our own. We change while hardly being aware of it.

The cloud era is a huge opportunity for America to get its mojo back. None of the companies I've mentioned in this piece are located outside the U.S., and I have yet to even mention the one I think will be the biggest winner in all this: IBM (IBM).

IBM has been in this cloud business longer than anyone. The company knows more about how to build them, run them and gain value from them than anyone.

But from here my crystal ball gets cloudy. I always get excited when that happens. You should too.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

At the time of publication, the author was long AAPL, MSFT, AMZN, IBM and GOOG.