Private cloud discredited, part 1

Back in January, I made a controversial prediction that private clouds will be discredited by year end. Now, in the eleventh month of the year, the cavalry has arrived to support my prediction, in the form of a white paper published by a most unlikely ally, Microsoft.

Titled simply The Economics of the Cloud (PDF), the document succinctly sets out the economic factors that make the public cloud model an inexorable inevitability, substantiating my long-held views. It deserves a full reading â don’t settle for the overview in the authors’ blog post announcing it. Here are some headline numbers that should give pause for thought:

• 80% lower TCO. The combination of large-scale operations, demand pooling and multi-tenancy create enormous economies in public cloud data centers: “a 100,000-server datacenter has an 80% lower total cost of ownership (TCO) compared to a 1,000-server datacenter.”
• 40-fold cost reduction for SMBs. “For organizations with a very small installed base of servers (<100), private clouds are prohibitively expensive compared to public cloud.”
• 10-fold cost reduction for larger enterprises. “For large agencies with an installed base of approximately 1,000 servers, private clouds are feasible but come with a significant cost premium of about 10 times the cost of a public cloud for the same unit of service.”

Since I know there’s a subset of ZDNet readers who will leap into Talkback to cry wolf on cloud security without bothering to read either the rest of this blog post or even looking at the white paper, here’s what it has to say on that particular canard:

“Large commercial cloud providers are often better able to bring deep expertise to bear on this problem than a typical corporate IT department, thus actually making cloud systems more secure and reliable … Many security experts argue there are no fundamental reasons why public clouds would be less secure; in fact, they are likely to become more secure than on premises due to the intense scrutiny providers must place on security and the deep level of expertise they are developing.”

That paragraph alludes to one of the key factors that I’ve been highlighting in my recent evangelism of the cloud model, the economies of scale for collective scrutiny and innovation. Amazingly, the document reaches its conclusions without adding in the additional economic benefits of this factor, which surely must deliver a knock-out blow to the private cloud concept. The collective feedback and testing from a diversified customer base enhances not only the security of a public cloud infrastructure but also informs and directs its evolution at a far more rapid pace than any private cloud will allow. There’s a virtuous cycle here, of course, in that public clouds are already more cost-effective as platforms for innovation, so that there is going to more innovation happening here than on private clouds anyway. That innovation will help to further accelerate the evolution of public clouds, thus amplifying…

(Cross-posted @ Software as Services Blog RSS | ZDNet)