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With new Web services, more companies are working in the ‘cloud’

Google, Apple, and now Microsoft turn the Internet into a portable filing cabinet for businesses.

By Staff Writer for the Christian Science Monitor / November 11, 2008

John Kehe/Staff


When Tien Tzuo founded an online billing company called Zuora last spring, he had his head in the clouds.

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Mr. Tzuo didn’t buy any powerful computers to store data. That meant he didn’t have to hire computer experts to keep them running. He didn’t even buy software like Microsoft’s Office for his employees’ computers.

Taking advantage of what’s becoming known as “cloud computing,” Tzuo bought all the computing services for his 42-person company at a nominal cost from Google, through a program called Google Apps. (Google also offers a similar service for free, if users are willing to deal with ads.)

All the computing is done online. Besides using Google’s familiar e-mail system (Gmail), employees at Zuora’s Redwood City, Calif., headquarters and its remote offices in places such as Beijing can collaborate on documents, share calendars, chat, and send instant messages to each other online. The employees feel close together, despite the huge distances between offices, Tzuo says.

“Any start-up that doesn’t use cloud computing right now is at a competitive disadvantage,” he says.

Like “Web 2.0” before it, “cloud computing” has become a controversial buzzword in the online world.

Some say it represents the most important change to the Internet since its inception. Others say the term is so wispy and ephemeral that, like a cloud, it’s impossible to grasp. Still others scoff that it’s only a fancy new term (fast wearing out its welcome) being attached to cyberspace trends that have been under way for years.

Whether people think about it or not, most already operate “in the cloud.” The inboxes for e-mail accounts from Google, Yahoo, or MSN are stored online, not on the user’s computer. Many people also post and share information at social networking sites like MySpace or Facebook. They may back up their PCs with online data storage companies or squirrel away photos at sites like Picasa, Shutterfly, or Flickr.

Some individuals also use the free Google Docs service, online programs that function in much the same ways as Microsoft’s popular Word, Excel, and PowerPoint programs, but allow users to access their documents from just about any computer they like.

“If you can walk into any library or Internet cafe and sit down at any computer, not caring what operating system or browser you’re using, and access a service, that service is cloud-based,” says George Reese, an online businessman whose book on cloud computing will be published next spring.

Traditionally, businesses, especially large ones, stayed away from cloud-computing services that left their sensitive, proprietary data on someone else’s computers. They wondered: What happens if my data is lost or stolen, or the cloud company goes bankrupt? is credited with changing that when it launched the Elastic Computing Cloud in 2006. The online retailer had developed a massive “farm” of servers, computers it needed to run its business. It decided to sell its excess computing capacity to others on a “pay as you go” basis. Google has taken a similar approach with the unused power from its gigantic server capacity, originally built to run its search engine.

With these two successes, businesses are starting to leap into the cloud. Spending on information technology cloud services will grow almost threefold to $42 billion by 2012, says IDC, a technology tracking firm based in Framingham, Mass.