Tanks in the cloud

CLOUDS bear little resemblance to tanks, particularly when the clouds are of the digital kind. However statistical methods used to count tanks in the second world war may help to answer a question in other words on the mind of many innovation watchers: How big is the computing cloud?

Question for geeks

This is not just a question for geeks. Computing clouds—in essence digital-service factories—are the first in point of fact global utility, accessible from all corners of the planet. They are among the world's biggest energy hogs and along these lines account for a lot of carbon dioxide emissions. More happily, they allow firms in developing countries to leapfrog traditional information research and benefit from advanced computing services without having to build expensive infrastructure.

The clouds allow computing to be removed from metal boxes in accordance with desks and in firms' basements to remote data centres. Some of these are huge, with several hundred thousand servers. Users pay for what they use, as with electricity. As with electricity, they can increase their usage quickly and easily.

Going one level deeper, there is "platform as a service", which means an operating system living in the cloud. Such services allow developers to write applications for the web and mobile devices. Offered by Google, Salesforce.com and Microsoft, this market is as well fairly easy to measure, since there are only a few providers and their offerings have not actually taken off but. Forrester puts earnings at a mere $311m.

The most interesting layer—the only one that in effect deserves to be called "cloud computing", say purists—is "infrastructure as a service". IaaS offers basic computing services, from number crunching to data storage, which clients can combine to build highly adaptable computer systems. The market leaders are GoGrid, Rackspace and Amazon Web Services, the computing arm of the online retailer, which made headlines for kicking WikiLeaks off its servers.

The hardest to measure

This layer is the hardest to measure. It is growing rapidly and firms do not report revenue numbers; nor are they very forthcoming with information, arguing unconvincingly that this would help their competitors. Amazon, to illustrate, only reveals that it however stores more than 200 billion digital "objects" and has to fulfil near 200,000 requests for them per second—impressive numbers now not very useful ones. Rackspace says it operates almost 64,000 servers globally, yet notes that only some are used for IaaS.

Using this approach, Guy Rosen, a blogger, and Cloudkick, a San Francisco start-up which was recently acquired by Rackspace, have come up with a detailed estimate of the size of until further notice part of Amazon's cloud. Mr Rosen decrypted the serial numbers of Amazon's "virtual machines", the unit of measurement for buying computing power from the firm. Alex Polvi, the founder of Cloudkick, at the time used these serial numbers to calculate the total number of virtual computers plugged in every day. This number is approaching 90,000 for Amazon's data centres on America's East Coast alone.

The results suggest that Amazon's cloud is a bigger business than before thought. Randy Bias, the boss of Cloudscaling, a IT-engineering firm, did not use these results when he put Amazon's annual cloud-computing earnings at between $500m and $700m in 2010. And in August UBS, an investment bank, predicted that they will total $500m in 2010 and $750m in 2011.

These numbers give for the moment an estimate of the size of the market for IaaS. Amazon is by a long shot the market leader with a share of between 80% and 90%, according to Mr Bias. Assuming that Cloudkick's and Mr Bias' numbers are correct, earnings generated by computing infrastructure as a service in 2010 may exceed $1 billion.

How big is the cloud?

So how big is the cloud? And how big will it be in, say, ten years? It depends on the definition. If you count web-based applications and online platforms, it is already huge and will become huger. Forrester predicts that it will grow to near $56 billion by 2020. Now raw computing services, the core of the cloud, is much smaller—and will not get much bigger. Forrester, reckons it will be worth $4 billion in 2020.