Are the economic concepts promised in Cloud Computing legitimate?

Are the economic concepts promised in Cloud Computing legitimate?
A closer examination of both sides of the cloud computing cost debate

Anyone who's studied cloud computing for any length of time should know that the technology driving the cloud offers distinct advantages and (if implemented properly) will most likely replace the current system that's in use. But let's not get ahead of ourselves here, it should be noted that cloud computing isn't really a new technological breakthrough at all; it's really a reconfiguration of existing computing and networking elements.

Cloud computing is basically a hybrid networking and computing concept at its very essence; no longer are they considered to be entirely separate entities. As a result, many things which were simply not possible or practical are becoming a reality courtesy of the cloud. However, there seems to be some major disagreements among individuals with regards to the economic benefits offered by the technology.

Some see the emergence of the 'pay-as-you-go' model used by most cloud computing service providers as trimming the fat, so to speak. You only pay for what you use and you don't have to absorb the cost of software or hardware ownership either, you are only liable for actual use of services. Still, others see this as a bad thing; to them, ownership equates to possessing additional assets.

Cloud detractors might also say that the costs are the same in both instances (cloud and grid). What's their reasoning? Since both computing models are essentially using similar, if not the same components or equivalencies, that the costs associated with computing in each instance should be the same. In other words, since hardware/software development companies, along with service providers are still going to have to be compensated at the same rate; (that's not going to change) so who's going to absorb the additional costs? Historically, it's always been the users that absorb any additional development costs and it is most sensible to assume that this will not change any time soon.

The reason why cloud computing is cost effective is actually very simple. It should be noted that larger amounts of hardware, software, electricity and periods of operation will all incur additional costs. So for example, if we have two systems (one cloud and one grid) that are nearly identical in terms of their power, energy usage, applied software and hardware what we are really looking for is overall efficiency.

The truth is that cloud computing definitely uses its resources much more efficiently than does the grid model, as a result, it is logical to assume that since grid computing wastes much more resources and energy that the costs associated with those operations cannot be recouped. In other words, grid computing is little bit like leaving the refrigerator door cracked open, while in cloud computing it is closed and insulated; too much energy is wasted in the grid model. This is the reason why many have clearly stated that cloud computing is much more cost effective in the long term; not to mention the fact that every year energy costs on the global stage seem to keep rising.

The real central issue with regards to cloud computing cost(s) should be, 'once an industry of service providers is firmly established, will they remain true to their word and keep their prices low'? What's to stop the major service providers of the future from hiking up their prices? It would be very easy for a coterie of companies to monopolize the computing market and simply raise their prices, just as virtually all companies are apt to do in every market. As users of cloud computing technology we must seek out assurances from our current and future providers that, once demand reaches a certain level, they won't simply opt to dramatically increase the prices of their services.

Arguably, what most people are not taking into account is the reality that it is much more likely that grid and cloud computing will exist alongside one another for quite a long time. It has been shown that businesses have been among the first groups to begin adopting cloud computing, this is because it allows them to perform their daily tasks more efficiently and in most cases, at a much cheaper overall cost.

Who's to say that the development of computing might not take an entirely different direction altogether? Perhaps cloud computing elements will recombine with grid computing in unforeseen ways, or maybe cloud computing will become a business standard and not gain any popularity among individual users? At any rate, cloud computing wouldn't exist if it weren't for grid computing, and it's not so much a competitor as it is eventual offspring. So, for those of you die-hard sponsors of grid computing; don't take the emergence of cloud computing personally, try not to eat your younglings.