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TheStreet Open House

Many Will Lose if Private Cloud Never Happens

Stocks in this article: AMZN DELL HPQ GOOG MSFT RAX INTC FB

NEW YORK ( TheStreet) -- Cloud computing, in which data centers replace dedicated servers with racks of commodity hardware and run software from any operating system that scales instantly, has a road map.

That road map starts with public clouds like those of Amazon.com (AMZN - Get Report), then moves to private clouds run by big enterprises beginning this year, and finally to "hybrid" clouds combining the two sometime mid-decade.

So this was supposed to be the big year for private cloud, and for companies like Dell (DELL - Get Report) and Hewlett-Packard (HPQ - Get Report) it was to be a year of redemption, with customers finally ready to write big checks to gain the economics of cloud with the privacy and security they claimed to demand.

But that future may not come. Dell's move to go private, and last Thursday's resignation of HP's Cloud Services general manager, Zorawar "Rai" Singh, reported by AllThingsD, indicate the private cloud revolution may not be taking off as planned.

This is mainly due to economics.

Public clouds are dirt cheap. Google (GOOG) has joined Amazon in a vicious cloud price war, which Microsoft (MSFT - Get Report) has reluctantly joined, TechCrunch notes. The blog Maildistiller says this will kill many smaller cloud providers in their virtual cribs , but it could be doing something else as well.

It could also be killing the idea of private cloud. Why build your own data center for cloud if it's going to cost you 10 or 100 times more than you might pay for renting capacity somewhere else?

Rackspace (RAX - Get Report), Intel (INTC - Get Report), Facebook (FB - Get Report) and other small cloud players are working together on what they call the Open Compute Project aimed at dropping cloud construction and management costs, encouraging private and hybrid clouds.

The group held its fourth summit meeting in Santa Clara last week, VentureBeat reports , and it was sold out at 1,900 seats.

Open source guru Tim O'Reilly keynoted the meeting, emphasizing the need to use common standards in building private clouds. It was a nice little meeting, but no one was burning dollar bills in the aisles. When industries move at Internet speed, you expect them to scale at that speed. As Data Center Knowledge noted in a short photo essay , this was still a technical meeting, not a trade show. Will it ever become one?

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