Cloud Computing and Your Wallet

by Ben Edwards on 7 September 2011 2 comments
Photo: Ed Yourdon

There's an enormous flood of money rushing into the cloud computing industry (as you may have guessed from all the recent TV and internet ads). Whenever there are billions of dollars chasing a new innovation, it pays to ask questions about how it will impact you and your wallet. This article examines how cloud computing could effect you as a consumer, an employee, and as an investor. (See also: 6 Cloud Tools for Small Business)

Cloud Computing for Consumers

One of the reasons that cloud computing has become so heavily used is because of the popularity of mobile devices. Chances are you've already been accessing the cloud in some form through your computer, phone, or iPad. Tablets and phones don't have the same processing power or storage space that we've become accustomed to on our desktops or laptops. So if you have a big audio or video file you want to save or you want to run a program that needs a lot of computing "muscle," your mobile device isn't really equipped to handle it. That's where the cloud steps in. Behind the scenes, the cloud is a huge collection of massive computers that have plenty of storage space and lots of processing power.

Your phone uses the cloud for storage or processing and just shows you the results. In a way, your phone is like your tiny window into the cloud. Many of the new mobile applications that have sprung up in the last few years are made possible by cloud computing. For example, Foursquare uses Amazon Web Services to help bring you deals from local businesses.

Of course, it's not only mobile devices that tap into the cloud. Services like DropBox, Microsoft SkyDrive, iCloud, SugarSync, and Mozy make it relatively cheap to backup your songs, pictures, and data (and also have mobile access). We all know how time consuming and expensive it can be to replace lost data, so the fact that the cloud makes it easier to set and forget your backups makes it worth your while to investigate. Here's a chart that lets you sort and filter the top cloud data storage services.

Cloud Computing for Employees

Cloud computing has enabled a major shift in the way small and large companies handle their IT needs. Many small businesses pay for hardware, software, and employees or consultants to set up and maintain more IT infrastructure than they actually need or use. The cloud model helps to change that problem for businesses. The cloud lets them rent processing power and disk space as they need it. They only pay for what they use, so the average business that uses its own servers just for email and back office functions stands to save some money by using the cloud.

These new services could be good news if they free up some money in your employer’s budget. The bad news is that if you're one of the IT workers that has been building and administering email or file servers for years, this shift could put your job in jeopardy as more of those functions are outsourced.

On the other hand, the growing trend of sending things to the cloud means that there are growing companies in the cloud industry that need people with IT skills to manage all the servers and data they're supporting.

Cloud Computing for Investors

If you’d like to invest some of your money in cloud technology, there are several ways you can buy shares in cloud computing companies. The most difficult is probably investing in new cloud startups like dotCloud and CopperEgg. These start-ups often get their funding from angel investors and venture capitalists. So not only do you need larger sums to invest, but the new technologies are still proving themselves and can offer more risk.

Another group of companies are ones that have been providing a variety of functions in the cloud computing industry for several years and have established products and cash flow. Some of the publicly traded companies whose products are used heavily in cloud computing are Riverbed Technology (RVBD), F5Networks (FFIV), VMWare (VMW), and Rackspace (RAX).

A third group of companies are the tech giants that sell software, hardware, or infrastructure that are used in cloud computing. Companies like IBM (IBM), Amazon (AMZN), Oracle (ORCL), and Microsoft (MSFT) obviously aren’t pure cloud computing investments, but they all offer products or services that businesses can use to take advantage of cloud computing.

Hopefully this quick overview of how the cloud can impact your wallet has been helpful. If there are other ways I’ve missed, please leave them in the comments below.

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Meg Favreau's picture

I LOVE automated online backup. I've had hard drives crash before, and the idea of losing all of my work terrifies me.

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Ben

I agree, one way of looking at it is this - how much would you be willing to pay to get back all the data on your hard drive the day after it crashed? Set that amount as the ceiling on your annual cloud storage budget : )