SaaS, market making, and the Cloud
So it seems like there is now a viable vision for utility computing. There is actually some promise in the Cloud -- providing, of course, that enterprises make the requisite investments in virtualization to encapsulate and consolidate their application stacks.
I'm now wondering if there will be a fluid market in computing capacity. Will it trade the same way that we currently trade electricity or other commodities? What has to happen to fulfill this vision?
1. Standardization. There has to be some sort of standardization on the types of services provided by different producers. There could be no universal market for electricity until there was some sort of standardization on service e.g., AC vs. DC, current, etc. Different cloud providers are currently offering very different types of services so it's certainly not a commodity.
2. Ratings. Assuming that we get standardization -- driven either by industry standards or by legislated standards -- then it becomes possible to compare different offerings. But there must be a mechanism that accounts for risk in these comparables. We would need some sort of D&B, S&P, Moody's.
3. Sufficient liquidity. There has to be enough market activity to support some sort of open exchange.
4. Market makers. Somebody is going to have to be the market maker for the emerging market in order to set prices, increase information, and improve process efficiency.
But could this process be bi-directional? Could anyone with a data center sell additional capacity into the web? This notion seems to resonate with some of the work currently being done in the electrical markets.