NEW YORK ( TheStreet) -- Sometimes a news story says more than it means to.
There was a message in the story smart money managers could have won some puts on. For the first time, Google was showing its secret sauce, the source of its power today and tomorrow.
Its cloud. That was bad in the near term -- showing the crown jewels is often a distraction from today's problems -- but important for the long term as a demonstration of underlying strength.Cloud technology remains misunderstood, sometimes deliberately. It's not just a data center. It's not just client server. It's both 10 times cheaper than anything that came before, and more flexible. It can adjust to demand so a job takes just a piece of one machine or many machines, on-the-fly. It makes maximum use of every machine. It can be as resilient as the Internet itself. Google developed the technology to serve its own needs, and has pushed cost savings at every turn. It was the first to use commodity PCs instead of big servers, the first to put its service into a box for delivery to phone switches and customer premises, the first to push energy efficiency and solar power. Because Google is the cloud cost leader it can give the results away. Its aim is to accustom everyone to getting their work done through a cloud, and benefit in time from having the lowest cost cloud. The only cloud vendor to have followed this path is Amazon.Com (AMZN - Get Report), but their EC2 scales according to customer demand, not anticipated needs. Amazon is better at drawing dollars from its cloud than Google, which only launched its Google Compute Engine this year, but it's hard to see it winning on costs.
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