Cloud Computing: Winners and Losers

I continue to ponder various points about cloud computing that were raised in a session on the subject in which I participated earlier this week. I paid particular attention to the presentation of a senior technical person, with extensive experience in cloud computing at a research lab operated by one of the world's leading high tech companies. His words got me to thinking about who might the winners and losers in a cloud computing-dominated world.

By way of quick summary, let us characterize cloud computing as the provision of various computer-related services where the user makes use of services accessible from a remote site instead of from the user's own IT resources. The underlying idea is that such sevices should be provided as a ultility analagous to electricity and water. While the concept was first floated in the 1960s, it entered the mainstream only in the last decade due to a series of hardware, communication, software and financial considerations. Two aspects are particularly noteworthy.

First, the user need no longer take software licences for which he pays regardless of whether the the software is actually is being used. Instead, under the SaaS model ("software as a service"), the user in principle need only pay for the software services that it actually uses (in actuality, it appears that this is not precisely the case, but the "software on demand" model is close enough for our purposes.) Second, the remote cloud computer centres serve to replace the need to maintain full-scale IT centres on-site. This is done by maintaining immensely large computer centres manned by the most skilled IT personnel, thus enabling the user to tap into these computer centres for a variety of their data services (so-called "platform as a service" and "infrastructure as a service").

Against this backdrop, who might win and who might lose? Permit me to propose the following list.

The Winners

1. Manufacturers of hardware and communications equipment--They will be called upon to provide the computer centres with the necessary equipment to support and expand these facilities.

2. Manufacturers of various hand-held devices--One of the claimed reasons for the recent attractiveness of cloud computing is the explosion of hand-held devices, which in principle permit connectivity anytime, anywhere. The popularity of these devices will be enhanced by the ability of their users to acess usable applications on the fly. The ability of the computer cloud to provide these contents will be a major determinent in how successful this hand-held revolution will actually be.

3. Users--There has long a been a feeling that users of computer software pay for software that in effect rests unused most of the time. When licensing models were based on payment per CPU, or user, or computer station, there was no ready way for users to free themselves from this model. When software is longer stored within one's local IT system, then the possibility is created for users to pay only for the software that they actually use.

4. Owers of the computer centres--It is Amazon.com that is widely attributed with first seeing the commercial possibility of making use of excess capacity in its computer centres to provide storage and access capablities. Whether true or not, it appears that a number of computer-related entities--e.g,, Amazon.com, Google, Microsoft and IBM--will come to dominate the infrastructure for cloud computing.

The Losers

1. Current software licensing models--Pureyors of software licensing may be challenged to find the kind of metric for charging users for the use of their software that will be as lucrative as the current model.

2. In-house IT departments--One of the claims is that local IT departments are both expensive to maintain and too often do not attract the calibre of person required to provide the necessary support. Whether that is true or not, the expansion of cloud computing may lead to a reduction of in-house IT positions.

3. Open source software--By some accounts, cloud-computing will only strengthen the hand of proprietary software, protected by copyright and patent, at the expense of software development under the open source model. Thus, while cloud computing may encourage cooperation at the user level, it does nothing to undermine, and may even strengthen, the hand of the proprietary software industry.

I am certain that there will be additional potential winners and losers in the cloud-computing world. In any event, it will be interesting to see how cloud computing plays out in the years to come.

More on winners and losers here

Open Source and Biotechnology: Whither or Whether Ideology?

I venture to say that most of us are well aware of the fault lines between proprietary and open source software. Proprietary software is characterized by keeping source code secret together with contractual restrictions on the use of the software, plus a reliance on the negative right aspects of copyright and other relevant IP law. Open source, to the contrary, rests on collaborative development and disclosure of source code, subject to various terms and conditions.

Less well-known is the effort to adopt the open source model to subject matter other than computer software. A particularly interesting effort in this regard is the use of open source principles in connection with biotechnology. A useful summary can be found in an article by the prolific and distinguished Professor Robin Feldman (left) of the University of California Hastings College of Law and Kris Nelson (a member of the Class of 2009 of the same school) that appeared in the Fall 2008 issue of the Northwestern Journal of Technology and Intellectual Property, "Open Source, Open Access, and Open Transfer: Market Approaches to Research Bottlenecks."

The authors discuss what they call Open Source Technology and Open Science. While the proponents of these variations of open source software are aware of the differences between the underlying subject-matter of software and biotechnology respectively, there appears to be a belief that that there is enough common ground to speak of both areas in a roughly similar fashion.With respect to Open Source Technology, there are two general categories. The first is described as focusing on bioinformatics ("the application of computer software and methodologies to solve biological problems"). The second category is marked by a move from the specific focus of the software interface to an effort "to ensure that the biotechnology tools required for research and innovation are openly available."

In particular, this second category centres on solving biotech-related problems in what the authors call "underserved communities." By this the authors mean communities with limited financial resources, with the result that there is an inability "to navigate the maze of patent rights and licensing necessary to engage in the targeted research." Stated otherwise, this approach intended to enable projects to deal successfully with the daunting problem of patent thickets.

Examples of projects of this kind are: (i) the HapMap Project here (a multi-country project researching genetic differences, with the goal of a certain mapping the human genome); (ii) CAMBIA here (expanding access to biological research, with a focus on disadvantaged communities); and (iii) the Public Patent Foundation here (aimed at solving the problem of patent thickets by establishing patent pools with open accessible patent rights to the participants of the program).

The authors point out several salient differences between Open Source licensing and the biotech variety:

1. Open Science is based on patent rights, which will sooner or later become public knowledge at some point. The same cannot be said of software under Open Source.

2. The resource requirements of Open Science, with an emphasis on sophisticated lab equipment, favor large organizations.

3. The very fact that Open Science is based on patent rights, while Open Source is based on copyright, means that each arrangement will reflect that particular aspects of the underlying legal right.

The authors conclude, with perhaps a tinge of understatement, that "Open Science Systems have not always matched their initial expectations." Perhaps the problem lies in the expectations themselves. When one considers the history of open source software, one is struck by the unique combination of ideology and technology that came together to forge "the movement". It is not at at all clear that this combination exists with respect to biotechnology, with the possible result that ideology may be the driving force, sometimes in an exaggerated and less than helpful fashion. That said, I have virtually no direct experience with open source arrangements in the biotech context. Perhaps my own views on the subject are themselves driven by my own ideological predilection on the subject.