Will Electricity Someday Become a Commodity?

via Twitter, @brennels asks: “Is Cloud Computing a Commodity? or will it be?”

I think it is a good question, because I think the commodity idea is at the heart of the cloud computing idea.  In “The Big Switch“, Nicholas Carr draws a parallel between the history of the electric utility industry, and the computer industry.

Electricity from a utility is, perhaps, the ultimate commodity.  Each unit of consumption is completely undifferentiated, to the point that few people can even identify where or even how the electricity in their home or office is generated.  This wasn’t always true.  One hundred years ago, 95% of electricity was generated by custom-built systems, owned, managed, and maintained by technicians employed by the factory.  The industrial age was defined by the power of machines in factories, and the start of that age had every factory generating it’s own source of energy.

Today, we are in the information age, and it is defined by the power of our information systems.  We are used to thinking of these systems as the humming, blinking boxes, racked and stacked in air-conditioned rooms.  But that is like thinking of your house as the land it is built on.  Processors and memory and disks and cabling are just the substrate, the surface upon which information systems are built.  The real systems are software applications.  When a CFO wants a new accounting system, the vendor typically says “start with a server with X capacity, and Y operating system”, and then makes configuration changes to the accounting software to accommodate the business.

In a factory, that is like a machine demanding a certain type and amount of electricity.  Today, a factory owner doesn’t have his PT (power technology) department build up a properly sized generator.  He just has an electrician put the proper type of outlet in the wall, and expects to see his monthly electricity bill go up.

Cloud computing has this same promise, that we can just buy as much undifferentiated computing power as we need, without building it ourselves.  Along the progression from dedicated on-site generators to ubiquitous electric utility, though, were a few stages.  Thomas Edison invented the idea of the electric utility, and launched the first one.  But his idea was a bunch of small providers, serving the local community, and his companies supplied the equipment to those providers.  Large companies bought his equipment and served their own office campuses.

Today, we have an integrated grid of power generators and consumers.  Adding more capacity to the grid is like pouring more water into a barrel – it all looks the same to the consumer.  Amazon is starting to make cloud computing look like a commodity, because I can just consume more storage and more CPU cycles, and they all look about the same.  But someday, I won’t care if my CPU cycles come from Microsoft, or Amazon, or Google, or Rackspace, because they will all look alike.  Maybe some trader will buy up cheap storage-hours in bulk from a local vendor, and sell them on the grid at market price.

Is Cloud Computing a Commodity?  It is getting close – I can order capacity on demand, and not worry about how it got built, or even too much about where it lives.  Someday, when I don’t care who’s name is on the building where my capacity lives, then it will be a real commodity.

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One Response to “Will Electricity Someday Become a Commodity?”

  1. Tirades, Nonsense and Occasional Specks of Usefulness - RoudyBob.NET - Blog Archive » What’s it take to become a commodity? Says:

    […] https://plaudenslager.wordpress.com/2010/02/10/10/ […]

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