Is Cloud Computing a Bubble About to Burst?

The current hype about cloud computing, now going on three years, is "just another bubble," says Gartner analyst Jack Santos. In Gartner-speak, it is reaching the peak of inflated expectations. But the higher the peak, the greater the crash to the trough of disillusionment), and this peak has reached amazing heights, Santos argues.

That might be so, but all consequential new technologies have a "hype cycle" and therefore always feature an investment bubble. The issue is not the over-investment, but the degree to which the sector has profound and destabilizing implications for the broader economy.

But there is another side to bubbles. "Even in a bubble, there is a germ of truth and reality," Santos notes. Google was a dot com, but was different. It proved to be the provider of a consequential new technology, unlike most of the other inconsequential endeavors.

The real trick in any bubble is not trying to talk yourself out of the hype, but picking the winners that come out of that bubble, Santos says. In other words, cloud computing is going to produce a couple of big winners. The unknown today is who those winners will be, and why they prove to be winners.

Cloud Bubble