With the broad adoption of personal computing, we have witnessed more than a quarter of a century of staggering incremental improvement in data processing power. These benefits have not only touched the traditional desktop. Smaller form factors such as laptops, netbooks, and now tablets and smart phones, are reaping the benefits of ever increasing clock speeds complimented by multiple core processors. In parallel, memory has become faster and cheaper.

A case in point is Apple’s iPad. Launched a year ago, the original iPad had a 1 GHz single core processor. A mere year later, Apple last week announced iPad 2 which boasts a dual core processor along with a nine fold increase in graphics processing capability. All of this at the same price yet in a form factor 1/3 thinner than its still novel predecessor. And a year later, Apple no longer owns the entire tablet market. Familiar names such as HP, LG, Motorola, RIMand Samsung are offering tablets with impressive specifications — all supported by powerful dual core processors.

The increase in processing speed, memory capacity and other performance related specifications align with Intel co-founder Gordon E. Moore’s law which essentially asserts that processing and memory performance improves exponentially per unit cost over the course of roughly one year. In addition, while battery technology is comparatively slow in its evolution, we’ve seen enormous improvements in power efficiency in microprocessors and RAM – allowing for device portability. Deloitte predicts that smart phones and tablets will outsell all other computer categories combined in 2011. Device portability is now an expectation of the consumer, and increasingly the enterprise as well.

With all this horsepower in the hands of the user, why is cloud computing so compelling? While the three previous installments in this series touched on cloud computing benefits such as real time collaboration, ubiquitous access to applications and user files on any device, perhaps the most compelling attraction is the exceptionally low cost of entry. Cloud computing user devices need be nothing more than a hardware platform functioning as an ultra thin client. Equally attractive, cloud computing is client platform agnostic – both from a hardware and operating system perspective.

For example, a user at head office on the east coast creates a spreadsheet in the cloud using her office notebook running Windows. Later on at lunch, she reviews the spreadsheet on her Xoom tablet and makes a few changes before discussing it with her colleague out on the west coast. Later on and now from home, that same user accesses the spreadsheet on her brand new MacBook Pro running OS/10. As she makes some final changes, her colleague from the west coast has the spreadsheet loaded on his office desktop running Windows. Through real time collaboration he adds the remaining numbers — the spreadsheet now ready for review by the CEO. The CEO is on an ecotour in Central America but is able to stop in a small village where there’s an Internet cafe. On an old PC running Windows 98 and with dial-up Internet access, the CEO pulls up the spreadsheet, reviews it, adds some comments and returns to his adventure.

Combining portability with a more ‘traditional’ user interface such as a low cost netbook is a very good platform for cloud based office productivity applications such as spreadsheet and document preparation. Even presentations are simple to prepare using cloud based applications.

Impact on the Network Operator

As the chart below depicts, cloud computing transfers virtually all of the burden away from the consumer and into the hands of the host (most often a webco), along with the network operator/carrier.

Clearly the end user enjoys very low fixed and variable costs. With service delivery via the Internet, virtually any device with a standards compliant browser can be used. In addition, cloud oriented ‘apps’ for smart phones and tablets continue to emerge – almost on a daily basis.

The aggregate cost burden for cloud computing service delivery (both capital and operational) is largely absorbed by the host webco and/or the network operator. With that in mind, cost mitigation and monetization strategies are being investigated by webcos and network operators alike.

Cloud Computing Cost Distribution

For network operators, an opportunity to repatriate some lost revenue from over-the-top users is one possibility. Many cloud computing webcos see benefit in dispersing their hardware assets beyond their own data centres. In the trend towards network edge oriented service delivery, installing an instance of the webco’s cloud services in a network operator’s facilities is becoming a compelling idea. This approach increases redundancy and geographic diversity for the webco, but it also disperses the global cost burden.

In turn, the network operator benefits from revenue sharing, or some other revenue generating mechanism. Co-branding, along with other enhanced marketing opportunities also become possible under such collaboration.

As the industry has learned in the past decade however, it is essential the user experience of the cloud service not be compromised in attempts to build walled gardens, or through attempts to offer reverse over-the-top services in competition with the webco itself. Users are sophisticated and know they have a choice. Importantly, users typically associate cloud computing value with the webco as opposed to the network operator. The enormous success of smart phone ‘apps’ stores offered by Apple, Google, RIM and others demonstrate that network operators are in fact cognizant of where their value is and equally important, where it isn’t. With that in mind, a great opportunity for network operator/webco collaboration awaits.

As a wholesale network operator in Canada, WireIE is capable of hosting Cloud services as a complement to our Transparent Ethernet Solutions.