In January 2008, Nicholas Carr released The Big Switch, which draws parallels between the revolutionary impact of the electric grid in the 19th century and the emergence of cloud computing as a new type of utility reshaping our modern world.
“Computing is turning into a utility,” Carr writes, “and once again the economic equations that determine the way we work and live are being rewritten.”
Microsoft has a huge advantage in cloud computing if partners can develop solutions that create this demand.
Though the comparison between the electric grid and the cloud may seem like a stretch, Carr quickly builds the case by tracing the evolution of an American factory from the 19th century to now, outlining the efficiencies of scale that the grid introduced. Before the ubiquity of the grid, individual factories maintained their own complicated and expensive power generation systems. Each of these had multiple points of failure and blockers to innovation and the ability to scale.
As electrical transmission lines and grids became readily accessible toward the end of the 19th century and into the 20th, a factory could untether itself from the lumbering generators of the past and instead hook into the grid, paying only for what it consumed while also removing obstacles that had stood in the way of expansion and innovation for centuries.
This shift spurred a golden age of innovation in American manufacturing. During this golden age, power costs plummeted and electrical output exploded. Between 1907 and 1927 alone, the output from electrical companies increased from 5.9 million kWh to 75.4 million kWh, while electricity prices decreased by 55 percent. Now we’re seeing a similar shift with the growth of cloud computing.
Today, companies like Microsoft, Amazon, Salesforce, and Google are establishing the next power grid, and companies are rapidly plugging in. Just as with the boom in electricity production more than a century ago, the cloud computing “grid” has reached a level of maturity allowing companies to bypass old throttles to efficiency and instead reach new levels of flexibility, collaboration, and innovation.
The cloud computing “grid” has provided companies with new levels of flexibility, collaboration, and innovation.
The Cloud Computing Grid
The cloud computing grid still has far more capacity than demand. Companies like Microsoft, Amazon, and Google are now competing to enable their technology partners to create that demand. As its CEO Satya Nadella is no doubt aware, Microsoft, with an ecosystem of more than 640,000 partners in the Microsoft Partner Network, has a huge advantage if partners can develop solutions that create this demand.
More demand also means more capacity, power, and storage for customers — at an even lower price. Economies of scale will create a cycle of exponential growth for both supplier and consumer. According to Rightscale.com, in 2015 93 percent of enterprises surveyed were already using the cloud, and IDC predicts “greater cloud spending” will exceed $500 billion by 2020.
In the race to sit atop the cloud computing throne, Amazon has had an early lead. But Microsoft is catching up… and is not only catching Amazon, but quickly expanding the services that can be consumed. No longer is it just storage and computing power, but specialized capabilities. These capabilities include BI, big data analytics, machine learning, the Internet of Things, networking and security, mobile, and media streaming, which can be leveraged and many times turned on with just a few clicks and tightly integrated together. The cloud is starting to deliver on Nicholas Carr’s vision, and Microsoft now has the partner stories that prove it.
Microsoft World Partner Conference
All of which sets the stage for the recent Microsoft World Partner Conference 2016 in Toronto. Microsoft showcased innovations from both its research lab in Redmond and its partners, who are leveraging the increasingly powerful and cheap access to computer capacity and storage. Microsoft presented and explored some truly game changing examples of leveraging this new cloud “grid” of power and services.
Microsoft showcased innovations leveraging the powerful and cheap access to computer capacity and storage.
Microsoft also made big product announcements as services continue to gain traction and expand, and is making completely new services available (especially around the Microsoft Azure platform).
We will be highlighting these innovations in follow-up blog posts that hopefully help clarify the incredible opportunities that exist as business enters another golden age of innovation made available by cloud technologies. Check back on the DEG blog for parts two and three of this series.