Computing Arbitrage: The new horizon of business models for cloud computing

Murky clouds, murkier computing

This is my first post related to a research area that I am pursuing quite vigorously these days. It has to do with cloud computing. Cloud computing has come along way now and has established itself as an active area of research. So the next big thing to happen for cloud computing must be cloud centric business models. Let’s have a look at some of the cloud computing business models that are likely to go mainstream in coming years. I spent some time thinking about it and here is the first cloud specific business model:

Computing arbitrage: One of the most innovative and impressive business models that I have studied so far. Putting in a nutshell, companies will buy bandwidth at wholesale arte and resell it to other companies for their specific needs. For example, Peekfon solved the problem of expensive roaming for the consumers in Eurpoe by buying data bandwidth in bulk and slice-it-and-dice-it to sell it to the customers. A truly classic market oriented model involving price negotiations, marketing and packaging requirements. Another aspect is the use of data compression for the purpose of bandwidth optimization.

When talking of cloud computing business models, we have to make sure that a balanced tradeoff exists between users needs for elastic computing as well as their demands for an assured fixed long term service delivery. So the need for computing arbitrage becomes quite clear. However, we can’t ignore another aspect of this whole scene. As the requirements of cloud users become more and more defined, the number of companies providing cloud services keeping a balanced tradeoff will keep on getting smaller and smaller as immature and inexperienced players will be pruned out. The danger I am visualizing is that we may be heading towards a sequel of “dot com” boom and bust. The scenario though quite far fetched now is not too unrealistic as well. All of this however, augurs well for companies that currently have a portfolio of cloud management tools or are "cloud SI".