This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Bottlenecks of the Cloud

NEW YORK ( TheStreet) -- Nearly everyone who has written about Yahoo! (YHOO - Get Report) CEO Marissa Mayer's ban on telecommuting, including me , focused on the cultural or business implications of the move.

But from a technical standpoint, the move also highlights some of the bottlenecks in modern cloud computing. These impact both your business and the businesses you invest in.

First, to secure corporate traffic, even when a worker is at home or on the road, most companies run a Virtual Private Network, or VPN. This encrypts the traffic, hiding it from prying eyes.

A VPN requires central control. Bits have to pass through the center of the VPN before going on to their designation. Even if you're not commuting into work, then, your bits are. This creates what network designer Andy Gottlieb called in Network World recently a "trombone effect," all the bits having to go in-and-out through one central point.

This hub-and-spoke system is analogous to the way old-line airlines like Delta (DAL - Get Report) have worked for years. Traffic comes in, it changes planes, and it goes out again. You can run a network switching center even more efficiently than Atlanta's Hartsfield-Jackson Airport, but as traffic increases -- and it always increases -- the bottleneck just gets worse.

There's a lot of money to be made in helping give VPNs something more akin to a Southwest (LUV - Get Report) route structure, avoiding the central hub but maintaining full security, just going back-and-forth, point-to-point. Maybe Yahoo! can help solve this problem with software while they're in the office.

The second bottleneck involves the way last-mile cable broadband networks are designed, including those of Comcast (CMCSA - Get Report) and Time Warner Cable (TWC - Get Report). I helped the industry explain this to its members 15 years ago, and it comes down to this: You're sharing the road.

It's incredibly costly to run fiber to every home, so cable networks get around this by building fiber rings out to neighborhoods. Each edge system feeds copper wires that go to homes, and this edge bandwidth is shared by all those users.

Let's say you're feeding 100 homes which are sharing 100 Megabits-per-second of bandwidth. If just one of those homes has a telecommuter, it's all good. They get all that bandwidth. If there are two telecommuters, each gets 50. If there are 10, each gets 10. And so on.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
CMCSA $61.00 -0.08%
DAL $41.62 -0.31%
LUV $41.44 -0.22%
TWC $212.69 0.08%
YHOO $36.89 -0.14%


Chart of I:DJI
DOW 17,648.59 -12.12 -0.07%
S&P 500 2,048.45 -2.18 -0.11%
NASDAQ 4,714.6390 -2.4550 -0.05%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs