The financial rag-writers are cloud-washing their stories. Writers are “spin” experts so cut them some slack given that every IT related company is now miraculously selling “cloud” computing. It is no surprise that they have slapped the “cloud” label on the recent acquisitions of Terremark, Navisite and Savvis.

Some great hosting companies have been bought recently but not any true “cloud computing” companies. Even the Wall Street people can understand that the so-called “cloud” revenues of these hosting companies are too small to be meaningful. How much clearer could the Savvis CEO be than to state that only $5 million of their nearly $1 billion in revenue is “cloud”?

Here’s a question for the wizards of Wall Street: Do you think a massive telecommunications company with a name like “CenturyLink” is going to be on the forefront of ushering in a new paradigm in computing? Which century? This doesn’t seem to be the track record for the 21st century. Acquirers like this admit that they are buying these kewl hosting companies because telecom is stale. Let’s hope that these self-confessed dinosaurs don’t take these formerly kewl hosting companies and prevent them from developing any cutting edge cloud offerings. This isn’t cloud consolidation, this is smoke from the mega-boardroom with a mandate to sell networks not develop technology.

Maybe these acquisitions sound “cloudy” because the marketing literature has the word “virtualization”? Ooooh. I bet stock-pickers really love the words “hypervisor” and “virtualization” ’cause those words sound high tech.  They sound like they could be the type of technology that must be the underpinning of cloud computing. They even are reminiscent of Star Trek as in “beam me up some servers Scottie”. “Now that must be cloud computing” they must think to themselves, “I need some exposure to this cloud computing revolution so I’m gonna look for stocks that ‘have’ this virtualization technology”. What they don’t realize is that hypervisors and virtualization are free, old news, and only one of many elements that make for state-of-the-art clouds.

True clouds enable a type of computing that was never before possible. True clouds are the choice of the new Internet companies because they let them compute in new ways that make their new business models possible.  The new best practices in computing require programmable infrastructure that is truly on-demand and massively scalable in a fully automated fashion and super cost effective. The state-of-the-art clouds enable this new genre of computing using purpose-built software that makes it all happen on commodity hardware powering über-efficient and massively-multi-tenant platforms that also enable great margins to the provider.

Clouds are still developing and merely keeping pace isn’t possible for companies dependent on vendors for technology to resell. Things are moving super-fast in cloud computing and that mandates a strong competence in R&D because you cannot buy the technology needed to compete with Amazon. And if you could buy the technology needed to compete with Amazon then you wouldn’t be relevant in terms of price. Even if you believe that these were cloud computing companies that were acquired, and we could debate the point, the safe bet is that they will become less relevant quickly.

Hearty congratulations to our hosting industry friends at Terremark, Navisite and Savvis! We’re happy for you and we praise your excellent work keeping valuations high for the hosting industry.

Related posts:

1. Financial and Technology Markets are “Cloudy”
2. Cloud News: Novell Identity Mgmt in the Cloud, Cloudy Financial Advisors & Cooperative Community Clouds
3. Presentation: “How To Get Started in the Cloud” GoGrid @ CloudWorld09
4. GoGrid Cloud Survey Report – What is Cloud Computing and Do You Use It?
5. Amazon is Amazing! (From the GoGrid CEO)