People Use Cloud Computing; They Just Don't Know

Whether one looks at how average consumers “compute,” or how industry segments “compete,” it now appears that cloud computing is poised to change the ways users interact with each other, use applications, communicate and compute. Some of the changes are obvious; others only now developing. 

Conceptually, there are several ways cloud computing already is used. Applications in the cloud is what almost everyone already has used in the form of Gmail, Yahoo mail, wordpress.com, Google apps, search engines, Wikipedia or virtually any Web-executable application.

Platforms in the cloud are used virtually exclusively by software developers and their clients. Developers write their applications to a open specification and then upload their code into the cloud where the app is run remotely.

Infrastructure in the cloud takes the software development process a step further. Developers use remote, network-based compute, storage, queueing, and other resources to create and run their applications.

“Cloud computing” sometimes is likened to grid or distributed computing, utility computing (computing as a service), software as a service, network computing, Internet-based applications, autonomic computing, peer-to-peer computing or remote processing. It typically is some combination of those things.

And as much attention as cloud computing gets in the enterprise information technology space, it already is making serious inroads in the consumer space.

Some 69 percent of online Americans use Web mail services, store data online, or use software programs such as word processing applications whose functionality is located on the Web, say researchers at the Pew Internet & American Life Project. They are, in other words, already users of “cloud computing,” an emerging topic in the enterprise computing space as well.

Some 56 percent of respondents say they have used a Web mail service such as Hotmail, Gmail, or Yahoo. About 34 percent say they have stored photos online. Some 29 percent say they have used online applications such as Google Docs or Adobe Photoshop Express, as well.

About seven percent say they store personal videos online, while five percent say they have a for-fee online storage service and another five percent say they use an online backup service.

About 51 percent of Internet users who have done a cloud computing activity say a major reason they do this is that it is easy and convenient. Some 41 percent of cloud users say a major reason they use these applications is that they like being able to access their data from whatever computer they are using, Pew researchers say.

Some 39 percent cite the ease of sharing information as a major reason they use applications hosted in the cloud, or store their data remotely.

As you might expect, users with mobile computer access are more likely to have done these activities. Among the 34 percent of online users who have used a WiFi connection on their laptop to go online, 79 percent have used at least one cloud computing activity above, and 52 percent have used at least two.

Release Window Opens; in South Korea

Warner Bros. Entertainment recently decided to release movies online before releasing them on DVD, at least in South Korea.  This reverses the long-established Hollywood distribution model and may open the door to a major increase in movie downloads. Why in South Korea? Film piracy.

Moving the more secure online system earlier in the release window is viewed as a way to keep pirated content out of the public domain a bit longer.

But researchers at MultiMedia Intelligence see the Warner Bros. initiative in Korea as being the start of a trend in implementing early release window content online. Already television studios are experimenting with online distribution windows that precede TV broadcast or DVD release windows. 

Make no mistake: it's all about the money. When content owners think they can make more money by giving online distribution a higher priority, they will do so. Today it is the DVD market which provides the highest profit and gross revenue, but not many expect that to remain the case forever. 

Mobile Enterprise Demand Grows

Enterprise information technology managers are badly underestimating the future demand for mobility devices and services in the enterprise arena, overlooking a new emerging class of mobile workers that rely on smart phones, where the traditional demand has been provided by traveling workers. 

On-the-road executives or managers, telecommuters or field service employees currently represent 20 percent of the workforce, says Forrester analyst Michele Pelino.

Call the workers driving the demand "mobile wannabes," if you like. Already, nearly a third of smart phone users expense all or some of their monthly bills for wireless voice services to their employers, while 40 percent expense the cost of their wireless data access to their company. Forrester Research estimates that by 2012, 73 percent of the workforce will be considered mobile.

This new class of workers represents just six percent of the present workforce, but Forrester estimates that they will grow to 25 percent of workers within the next four years. In fact, Forrester estimates 73 percent of the workforce will be considered some sort of mobile worker by 2012. 

Mobile wannabes include executive assistants, human resource workers and finance department employees who are generally at their desks most of the day but use smart phones to access email and other corporate applications while commuting to work or while away from their desks. Millennials, workers younger than 30 years of age also expect mobile support.

Most of this growing group of users buy their own devices, so the trick is to create new service plans that are affordable enough to encourage broader use of mobile data services, Forrester says.

IPhone Competitors Emerging

What percentage of the online iPhone researchers on AT&T's site were looking at other mobile devices in July and August? Quite a few, say reserarchers at Compete.

Sprint's Samsung Instinct seems to have been the iPhone's best competition so far, Compete says. About five percent of visitors checking out the iPhone also checked out the Instinct. In both July and August, it was the alternative most viewed by iPhone 3G researchers.

The AT&T Tilt and the LG Dare were viewed by more iPhone 3G researchers in August than they were in Julyn Compete says, getting three to four percent of iPhone investigators to take a look.

But the big question is, what makes a good iPhone alternative? So far, the touchscreen seems to be a key factor – the Instinct, Dare, and VU all have one – but there's clearly more to the appeal to the iPhone than that, Compete argues.

Nokia is answering the integration of music with the iPhone (via iTunes) with the "Comes with Music" feature.

The G1, offered by T-Mobile and featuring Android also should be a factor at some point, as should the new line of touch screen BlackBerrys, Compete argues. Google might be able to leverrage its open apps environment, while enterprise users hungry for a touch screen interface on their BlackBerries will drive adoption of those new devices.

The point is that Apple's iPhone has recast the device market.

Verizon Wireless to Start Charging for Messaging Fees

Effective November 1, 2008, Verizon Wireless is assessing a transaction fee of $0.03 for every commercial text message (terminated on a moble handset). The new rules do not apply to people sending text messages to each other, but rather to content firms that today pay fees to send or receive commercial text messages of one sort or another. The new fees also do not apply to text message applications, even if commercially-based, if they are free to the end user or are sent or received  by non-profit entities.

Interactive voting and text search or text alert applications most likely are covered by the new fees. 

Current commercial text messaging fees are said to cost the commercial sender anywhere from a fraction of a penny to a few cents, so the plan will have huge impact on use of such commercial text messaging apps. Predictably, commercial users will cry "foul." Perhaps Verizon should have, or still can, scale the increases in a more-gradual way, allowing their commercial customers time to adjust. 

In principle, though, we ought to expect similar sorts of moves on a rather broad range of fronts as broadband and mobile providers try to create new revenue models that involve some sort of revenue sharing between content providers and the carriers themselves. 

Commercial customers have sound financial reasons for objecting to the practice: free or cheap distribution is a better cost model for content providers than having to share revenue or pay fees for any number of conceivable services an ISP or access provider might provide. 

What is not contestable is that if the global service provider industry is in the midst of a fundamental business model evolution--where voice revenues in fact continue to decline as the industry revenue mainstay--then other revenue sources must be developed to replace virtually all of the lost voice revenue and margin. The actual cost of creating and operating a text message infrastructure is not the issue: lots of products are priced at retail in a way that is not strictly related to the cost of providing them. Sales and loss leaders are widespread retail practices, and products run a gamut: some are low-margin or negative margin, others are modest margin products and some are high-margin products. Production cost is only part of the retail price equation. 

The Verizon move is indicative of the seriousness of the revenue transformation. Voice is going away as the foundational revenue driver and must be replaced. Service providers have no choice in the matter.

Content providers won't like the change. But these and similar moves in other parts of the business are inevitable. If the future of communications network revenues cannot be based on voice or simple broadband, it must be based on something else. And if more content begins to be delivered using broadband networks of all sorts, some revenue-sharing model, where service providers are part of the revenue chain, must be created.

That doesn't mean content providers have to like the change. But in the absence of meaningful ways to sustain the networks on voice or broadband access revenues, service providers do not have a choice. So look for more "channel conflict" in the years to come. It is inevitable. 

There is no Free Lunch

Mobile providers in the Phillippines say they will have to raise text messaging prices if the government seizes half of text messaging revenues to fund  new health and education initiatives in the country. Under the proposed plan, the government will claim13.5 centavos of the 27 centavos currently charged. 

At the end of the day, consumers always bear the burden of all taxes, fees and charges. Businesses simply collect those fees and forward them to government agencies. What else would any manager do, given the need to make a profit margin of "X," on a cost structure of Y, when it is clear a cost structure now is "Y+N?" 

Rogers Drops 256 kbps Broadband Tier

Rogers Communications seems to be dropping support for a low-speed wireless broadband service, Broadband Reports says. Apparently Rogers has discontinued its "Portable Internet Basic" tier. That plan, costing $24.95 a month, supplied 256kbps downstream and 64 kbps upstream. The "Rogers Portable Internet High Speed" costs $49.95 a month and supplies 1.5 Mbps downstream and 256 kbps upstream. 

Both services have a 30 GByte monthly usage cap. Rogers apparently now wants to offer just a single tier of service, the  1.5Mbps version, though they've lowered the price to $44.95. 

At least some users will complain about the inability to buy the lower-speed tier. Personally, I think it is odd to offer a 256 kbps "broadband" tier in the first place, though Rogers might have considered a tier offering more bandwidth than 256 kbps and less than 1.5 Mbps.