An Excerpt from the New Report: Identity in the Age of Cloud Computing

By JD Lasica, Senior Fellow, Society for New Communications Research Center for the New Economy

Why the Cloud Matters

According to Newsweek: “At the end of August [2008], as Hurricane Gustav threatened the coast of Texas, the Obama campaign called the Red Cross to say it would be routing donations to it via the Red Cross home page. Get your servers ready—our guys can be pretty nuts, Team Obama said. Sure, sure, whatever, the Red Cross responded. We’ve been through 9/11, Katrina, we can handle it. The surge of Obama dollars crashed the Red Cross website in less than 15 minutes.”

The New York-based tech start-up Animoto, which lets users create professional-quality, MTV-style videos using their own images and licensed music, was averaging 5,000 users a day until it suddenly received a burst of new users who discovered it through Facebook. Its traffic surged to 750,000 visitors over three days. The number of servers Animoto was running on jumped from 50 to 3,500 during that span of time. “It was just numbers we never imagined we would ever see,” chief technology officer Stevie Clifton told a Seattle newspaper. “It was fun and scary and pretty cool.” Thanks to AmazonWeb Services, Animoto’s servers did not crash, because Animoto does not have any servers. It outsources its computing power to Amazon.comand pays only for what it uses. The ten-employee company is now expanding. Amazon CEO Jeff Bezos touts Animoto as the poster company for cloud computing.

The tales of the Red Cross and Animoto neatly sum up the contrast between the former economy and the emerging cloud economy. If the Internet economy is an apt descriptor of the changes taking place around us today, then the term cloud economy could justly be ascribed to the still larger global disruptions ahead. Google CEO Eric Schmidt has called this “the cloud computing age.”

What is the Cloud?

What is the cloud, where did it come from, and what does it portend?

The computing industry has evolved rapidly over the years. Mainframe computers, which began it all, were centralized with a professional class accessing information from terminals with little computing power; data transfer often took place on foot, as people carried floppy disks from one machine to another. Mainframes gave way to minicomputers (chiefly used in labs and factories in the 1970s), which begat personal computers, which brought processing power to the individual’s desktop with basic applications likeWord documents and spreadsheets.

The personal computing revolution became portable with laptops, handheld devices and smartphones. With every evolutionary step, computing’s underlying architecture became more distributed. As the Internet became widely adopted in the 1990s, personal computers not only stored data locally but downloaded and exchanged data all over the Web.

We are now in the middle of another shift. As the Pew Internet & American Life Project put it in a September 2008 study:

Recent evolutions in information technology have led to a more distributed computing environment, while also reviving the utility of centralized storage. The growth in high-speed data lines, the falling cost of storage, the advent of wireless high-speed networks, the proliferation of handheld devices that can access the Web—together, these factors mean that users now can store data on a server that likely resides in a remote data center. Users can then access the data fromtheir own computer, someone else’s desktop computer, a laptop that wirelessly connects to the internet, or a handheld device.

This is where cloud computing enters the picture, as users at home and in the workplace have begun to manage their data, run applications, crunch numbers and operate entire enterprises on a virtual platform in the sky.While the actual computing may be taking place on the next block or on the other side of the world, to the user it looks as if it is happening on the screen in front of you.

The leap to the cloud echoes what occurred more than a century ago, author Nicholas Carr said in his keynote talk at the 2008 Xconomy conference. In the 19th century, companies often generated their own power with steam engines and dynamos. But with the rise of reliable electric utilities, companies stopped generating their own power and plugged into a shared electrical grid. Information technology is undergoing a similar evolution today.

The public may not be familiar with the term, but many are already doing cloud computing. We have been using Web applications for years without any concern about where the applications actually run. The Pew study found that 69 percent of Americans connected to the Web—and especially younger users—already use some kind of cloud service, such as Web email (Gmail, Yahoo! Mail or Hotmail), online data storage (IDrive, Mozy, or online software. For example, Google Docs offers Web-based office tools such as word processing and spreadsheets. Zoho, a start-up in Pleasanton, California, offers an even more robust suite of office productivity tools. offers an easy way to access bookmarks online. Bloglines and Google Reader are Web-based RSS readers. Tens of millions of us have uploaded videos to YouTube and sent photos to Flickr, SmugMug, Photobucket and other hosting sites.

The cloud has become our entertainment network: we are spending hundreds of millions of hours on sites like YouTube, Hulu and Flickr. The cloud has become our social network: Facebook, MySpace, Bebo, hi5 and similar sites now claim hundreds of millions of members. The cloud has become our virtual library: when we do a Google search we are fingering the cloud. The cloud has become our workbench: we manage projects in Basecamp, share large files with Pando, tweak photos in online photo editors like Adobe Photoshop Express and Picnik, and edit videos online with JayCut and Jumpcut (now closed). The cloud has become our development network: open source programmers trade code on sites like and

The term cloud computing, which came into wide use in tech circles only in early 2007, does have a specific, technical meaning. It refers to a collection of resources—applications, platforms, raw computing power and storage, and managed services (like antivirus detection)—delivered over the Internet.One Forrester Research analyst defined it as “a pool of abstracted, highly scalable, and managed compute infrastructure capable of hosting end-customer applications and billed by consumption.”

Gartner Group defined cloud computing as “a style of computing where massively scalable, IT-enabled capabilities are provided ‘as a service’ to external customers using Internet technologies.” …

A Broader Meaning

But many people now accept a broader meaning for the cloud, and this is the context in which the roundtable tackled the subject. More than a decade ago Oracle CEO Larry Ellison declared that the network would become the computer, and many people now refer to the emerging next-generation Internet as “the cloud.”One should think of the cloud not just literally, as an information technology infrastructure, but as a metaphor for this new frontier of democratizing possibilities that these disruptive new communication technologies herald.

An SAP white paper released in September 2008 warned that policymakers are not aware of the dramatic economic impact of the “Future Internet,” as the paper calls the cloud. The report concluded: “The next generation of the Internet enabled by software will lead to the most significant changes in the economy in the next decade. It will drive productivity gains in many industries and shape the future of the services sector in all knowledge-based economies.”

At the Stanford Summit in July 2008, Anna Ewing, executive vice president and chief information officer of Nasdaq, invited people to think of the cloud as putting high-powered enterprise technology in the hands of the masses via the Internet. Russ Daniels of Hewlett-Packard suggested the key ingredient is virtualization—using someone else’s computer to do the heavy lifting for you. Polly Sumner of said the smallest retail store can now use software as a service to run its financials and manage customer relationships in the cloud, while entrepreneurs will build processes and a new generation of applications we cannot even guess at yet.

In other words, what the cloud is may be less interesting than what the cloud does—or could do.

The New York Times wanted to convert 11 million articles dating from the newspaper’s founding in 1851 through 1989 to make them available through its website search engine. The Times scanned in the stories, converted them to TIFF files, then uploaded the files to Amazon’s S3, taking up four terabytes of space. “The Times didn’t coordinate the job with Amazon—someone in IT just signed up for the service on theWeb using a credit card,” IDG News Service reported. Then, using Amazon’s EC2 computing platform, the Times ran a PDF conversion application that converted the 4TB of TIFF data into 1.5TB of PDF files. Using Amazon’s computers, the job took about 24 hours.

When Nasdaq wanted to launch a new service calledMarket Replay to sell historic data for stocks and funds, it turned to S3 to host the data and created a small reader application using Adobe’s AIR technology that let users pull in the required data. The expense of storing all that data on Nasdaq’s own servers would have been prohibitive. Instead, by offloading the data to the cloud, Nasdaq now has a modest new revenue stream.

Other examples abound. Medical robotics firmIntuitive Surgical and recruitment services provider Jobscience use’s cloud environment to create new applications. Pharmaceutical companies tap into AmazonWeb Services to calculate simulations; the U.S.Marine Corps is using it to reduce its IT sites from 175 to about 100, and The Washington Post used it to turn Hillary Clinton’s White House schedule during her husband’s presidency,more than 17,000 pages, into a searchable database within twenty-four hours. The European consultancy Sogeti has used a cloud built by IBM to test new ideas and cobble together an IT system for a company-wide brainstorming event.

To handle this burgeoning demand for the cloud by businesses and consumers, bigger and more energy-efficient data centers—7,000 in the United States alone so far—are being built. Besides Amazon, Google reportedly has two million servers running around the world. Yahoo! is busy building huge server farms, and Microsoft is adding up to 35,000 servers a month in places like its data center outside of Chicago, which covers 500,000 square feet at a cost of $500 million, with plans to hold 400,000 servers.

The preceding is an excerpt from a new report, Identity in the Age of Cloud Computing, by JD Lasica for the Aspen Institute. For more information and to download this report and other free e-books by JD Lasica, click here.

J.D. Lasica is a Senior Fellow and Advisory Board member of the Society for New Communications Research. He works with major corporations as well as mid-size companies, startups and nonprofits as a social media strategist. He is widely considered one of the world’s leading authorities on social media and the revolution in user-created media. He is chief executive of, a firm offering social media solutions to businesses and organizations that want to use social media, video and online communities to build customer relationships and promote brands. He is also founder of the soon-to-launch, a social enterprise offering a learning center and strategic solutions to nonprofits and social causes. JD’s book Darknet (Wiley & Sons) explores the emerging media landscape. In March 2005 he co-founded, the first grassroots media hosting and sharing site. His blog was named the No. 1 social media site in a list of the Top 100 social media websites, and CNET named him one of the 100 top media bloggers in the world. In a previous life he was an editor and columnist at the Sacramento Bee.