The REAL History of Cloud

8 Oct 2014 by Intermedia

A man using a laptop while sitting in a data center

The word ‘cloud’ is new, but the concept is not. When Intermedia started offering Microsoft Exchange in 2000, it was called “hosting”. Today it’s called “cloud.” Tomorrow it will probably be called something else.

But let’s put the buzzword aside and focus on the transformational change that underlies it.

History provides a great analogy. If you look at photos of 1890s factories, they all seem to have water wheels or windmills. That’s because water or wind was the source of energy. Every single factory had to invest in people and infrastructure to harness this power. This was a steep barrier.

Then centralized municipal power plants came online. This allowed factories to get out of the business of power generation. They transformed the cost of energy from a steep capital investment into a simple cost-per-unit charge, and reinvested their capital into growing more competitive.

Fast forward 120 years, and that’s what’s happening in IT. In the recent past, companies were forced to invest in on-premises servers and expertise. But the cloud allows them to outsource their IT and transform a capital investment into a cost-per user charge.

This is as transformational as centralized power plants. And it allows businesses to scale dramatically by leveraging IT services that were otherwise entirely out of reach to all but the biggest companies.

(Incidentally, it also allows the provider to innovate on behalf of millions of customers. Over the decades, utilities built far better tools for energy generation and transmission than individual companies ever could, while IT providers such as Intermedia innovate on a massive scale that individual IT teams could never achieve.)

Now, here’s what’s really exciting: it’s still the first inning for the cloud. According to the Radicati Group, an Exchange industry analyst, there are nearly 500 million Exchange mailboxes in the world—and 85% of them are still powered by on-premises servers. And that’s just ONE IT function. Think of all the phone lines and file servers that are also still on-premises.

For all the excitement around the cloud, it’s clear that we’re just getting warmed up.