Is The Cloud a Bubble?

Posted by Jim Van on May 4, 2011 under mobility, portability, small business | 2 Comments to Read

Sometimes I feel like the tech industry has more bubbles than a Lawrence Welk rerun. We all fondly remember the dot com bubble and its spectacular burst. Lately, the headlines, marketing emails, tech (and business) magazines and conversations at conferences have focused on cloud computing and social networking.

Cloud computing and its related cousin, software as a service (SAAS) has been with us for years. Its growth was greatly aided in the mid-90s by the growth of broadband internet access, making things possible that just weren’t prior to the availability of high speed internet. Wireless internet, once an oddity, is now ubiquitous. One can sit in a McDonalds and browse the internet from one’s iPad. The growth has been nothing short of remarkable.

Equally remarkable has been all the noise surrounding ‘the cloud’. Everywhere one turns, everything is connected to, or through ‘the cloud’. Services that used to be available only to the largest corporations are now accessible by even a teenager on a smartphone. And it’s all happened, really, in about 5 short years.

So, if the cloud is here to stay, or more accurately, morph into something else even bigger, where’s the bubble? For a starter, there’s a seminar that’s travelling around this part of the country right now, being presented in area hotels and even civic centers, promising investors untold riches in a cloud system guearanteed to make money. For a price, of course, and there’s not really a guarantee, but it all sounds wonderful. Then there’s the explosion of firms offering all sorts of cloud services, ranging from consumer-focused companies to business-to-business firms. In 2010, an annus horribulus, to quote The Queen, from an economic point of view, the number of firms offering cloud-related services in the US grew at an estimated 930%, according to Garnet, a Stamford, Ct.-based IT research firm that studies such things.

Sound familiar? While ‘the cloud’ won’t be going away, one has to wonder how many of these cloud-services companies will be left standing in a year, two years, and how many will be gobbled up by larger firms, who themselves will consolidate into even larger firms whose focus will be more diverse than purely cloud computng.

But we did also mention social networks, didn’t we? Facebook, quite simply, is the new AOL. Remember when it seemed like every network TV series had a group on AOL? Facebook has supplanted AOL as the venue of choice, not only for media shows, but businesses of all types. I just received an email from our lawn service with a link to ‘like’ them on Facebook. Add the someone-subsided hype over Twitter, the seeming ebb of interest in ‘checking-in’ on Foursquare or Yelp, and, while no one anticipates the demise of Facebook, Twitter, or many of the other social networking sites, one must concede that there are a plethora of them, and that they take up a lot of time for small business to maintain a presence on them.

Another bubble? Absolutely. The key with social networking, as with most any bubble, is to navigate the benefits amidst the carnage after the burst. The advantages are there, if one can see beyond the hype.