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TheStreet Open House

The Great Cloud Squeeze

NEW YORK ( TheStreet) -- Everyone now seems to know the Cloud is not just the Next Big Thing, but the biggest thing ever.

An architecture based on a virtual operating system that lets a host of commodity servers do the work of the fastest alternative hardware, cloud was pioneered by Google (GOOG) early in the last decade, then turned into a business by Amazon.com (AMZN) as Amazon Web Services.

AWS is an infrastructure for computing, sold as a service. The acronym is IaaS. Add software languages to the infrastructure -- the tools with which you write software -- and you have a Platform as a Service, or PaaS.

Actually do something with your platform, as Facebook (FB) does in the consumer space and Salesforce.com (CRM) does in the business sphere, and you have Software as a Service or SaaS.

But it all rides on the infrastructure. IaaS is the base, the operating system, of the cloud. As with Microsoft (MSFT) a generation ago, he who takes the base takes the game. So the analysts believe.

Amazon's success was followed by the launch of a host of startups, most of them using an open source process to collaborate in new ways. This was highlighted by the launch of OpenStack, a complete open source cloud infrastructure pioneered by NASA, under the initial corporate sponsorship of Rackspace (RAX), previously known as a Web hosting company.

With IBM (IBM) having now endorsed the OpenStack IaaS architecture, however, and Amazon constantly cutting prices to dominate the public cloud infrastructure market (making its Application Program Interface or API a de-facto industry standard), the squeeze is on.

Where is Google in all this, for instance? Google offers public cloud services as the Google Compute Engine, but it seems unable to gain traction in that market against Amazon. Where, for that matter, is Microsof? Microsoft was quick to market with its Azure cloud and depends on it to host its own operations, which are increasingly cloud-based. But it sometimes seems like a one-company parade.

The company most squeezed by the new cloud environment is VMware (VMW), which meets with industry analysts Wednesday. As Gigaom.com notes VMware seems caught between a desire to compete against Amazon with a public cloud and pushing its own infrastructure against IBM because OpenStack uses the KVM virtualization engine rather than vSphere, on which VMware made its reputation.

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