Handful of Cloud Miracles for 2014

NEW YORK (TheStreet) -- The big cloud-computing headline is that we may soon stop using the term. Cloud has become the mainstream of computing, just as e-commerce has become the mainstream of commerce.

Cloud is not an option. Virtual operating systems and infinite scaling, a "barbell" in which the high-end hosts and hand-held device makers crush the computing middle class -- that's the reality for businesses and investors.

The question for 2014 is how many public clouds will survive the coming shakeout.

Amazon.com's (AMZN) vicious price war strategy has given the world's dominant online retailer most of the market, so Google (GOOG) and Microsoft (MSFT) have had to match prices and features. IBM (IBM) is promising "big things" for early next year, but it's unclear whether Big Blue can add any new features to make much of a difference.

If IBM can't make a dent in Amazon's lead, what are the chances for success for Hewlett-Packard (HPQ), AT&T (T), Verizon (VZ), CenturyLink (CTL) or Rackspace (RAX)? With Amazon's infrastructure system becoming an industry standard, same goes for VMware (VMW), Citrix (CTXS) and RedHat (RHT)?

Most of these competitors will be forced to find some refuge in the "private cloud." Private cloud is like desktop Linux or a Cowboys Super Bowl win: They tease it but it never seems to happen. Cloud costs much more to build than to buy, so most don't.

Because renting cloud is so cheap, many enterprises are moving key applications to "faux cloud" systems run by Salesforce.Com (CRM), NetSuite (N) or even Oracle (ORCL), based on Oracle's proprietary services and databases.

There are savings, the software all updates together, it's the same inventory, customer management or human relations system as before, so why build a private cloud?

Can China change this equillibrium? Amazon is already going into China. Can fear of the National Security Agency? Some countries will join Switzerland in demanding local hosting of local data. But will it make a difference?

Cloud was filled with acronyms. IaaS -- Infrastructure as a Service. That's the basic cloud technology Amazon.com has been selling. PaaS -- Platform as a Service. That adds the languages and tools you need to create Software as a Service (SaaS). SaaS is what you get when you use PaaS on an IaaS.

Red Hat and VMware are basing their cases for 2014 on cloud PaaS. Red Hat sells a platform called OpenShift on its own version of open source OpenStack. VMware has spun out its Pivotal Initiative, which offers a platform called Cloud Foundry on VMware's vCloud.

Cloud has come on so fast, with such narrow margins, that it's hard to see anyone not already dominating in the service or software sector making a go of it.

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So where are the profits? They are where they have always been, in the applications. Amazon got the capital to dominate the public cloud market because Amazon.com is a cloud application.

Facebook (FB) is a cloud application aimed at consumers. LinkedIn (LNKD) is a cloud application aimed at business. Yahoo! (YHOO) has been buying cloud applications like Tumblr to maintain its viability. Can it create new ones from the staff it's "acqui-hiring?" On that will hang the fate of CEO Marissa Mayer.

Media has become a cloud application. Netflix (NFLX) is also a cloud application, aimed, of course, at disseminating television and film. Apple (AAPL) has used its dominance in mobile to build two huge data centers for its iCloud. The media industry will depend on these two, along with Google's YouTube and (of course) Amazon, in the battle with cable powers like Comcast (CMCSA), which will try to use their dominance of the "last mile" -- the plug in your wall -- to keep out others' applications and survive.

Want to know how crazy all this has gotten? Wal-Mart (WMT) looks like an underdog with its Vudu video service and online sales effort trailing Amazon as badly as smaller stores trail it.

This started as a piece about cloud computing but you may have noticed how it has touched on many other areas: corporate computing and hiring, consumer services and media, how we buy and sell.

So here's a final prediction: Some things will happen next year that upset everyone's applecart.

Just remember, there is no such thing as cloud computing, just computing. There is no such thing as e-commerce, just commerce. And there's no such thing as mobile, just cloud-based apps.

That's the cloud world for 2014.

At the time of publication the author owned shares of GOOG and AAPL.

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


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