Isn't everyone looking for a virtuous cycle? Virtuous cycles seem to be close relatives to the mythical perpetual motion machine. Once a virtuous cycle starts, they create new value every day. For example, the virtuous cycle of Moore's Law, single-chip CPUs, 'standard' hardware architecture, common OS, memory improvements, Gilder's Law, and shrink-wrap application software created the PC industry. Their continuous improvements collectively created the momentum that gave rise to the high-powered, low-priced laptops that we use today.
Will there be a virtuous cycle for cloud computing? It is too early to know for sure. My impression is that a virtuous cycle may be forming out of the following, seemingly-unrelated parts: application usage, efficient development, geographically dispersed teams, horizontally scaled systems, Internet bandwidth, operations commoditization, social connections, and global reach. Let's take a look at each of these trends.
Application usage. Consumers are growing accustomed to using applications over the Internet, or software-as-a-service. The application is present by just typing an URL into any browser. The notion that the consumer has to run the application on her own system or device may be ebbing away. More powerfully, consumers may be finding the constant installation, updates, reboots, backups, and reconfiguration are hassles to be avoided. SaaS's sidestepping these hassles is becoming a 'customer delight'.
Efficient development. Software development teams are finding the power of lean and agile software development methodologies. Modeled after lean manufacturing techniques and high performance teams, these relatively new software development cycles are placing consumer needs directly in front of software development teams, and allow the rapid production of services which satisfy the highest consumers' needs.
Geographically dispersed teams. Work has increasingly been done by geographically distributed teams over the past two decades. Methodologies have been developed to increase distributed team productivity such as distributed source code control systems, scrum methodologies, and efficient team communication. However, the next big boost for dispersed teams may be virtual data centers provided by Cloud Computing. SaaS companies have reported productivity gains by moving their development and test environments to the cloud. The move increased communication efficiency and lowered bug rates because everyone was using the same resources in the same fashion.
Horizontally scaled systems. Horizontally scaled systems or distributed computing has been the holy grail of computing for a long time. A key problem has been that programming, deployment and management of horizontally scaled systems was extremely difficult and required highly skilled experts. This will likely remain true for some time. However, IaaS, in particular, Amazon Web Services and RightScale, has shown that programming, deployment and management tools are starting to emerge that can ease these difficulties. PaaS, such as Microsoft's Azure and Google's AppEngine are exposing interfaces to make writing horizontally scaled application available to mere-human developers.
Internet bandwidth and prices. While the cheap days of lighting up the dark fiber left over from the original Internet boom may be limited, improvements in wavelength-division multiplexing (WDM), higher quality fiber, and new capital investments will likely continue to increase bandwidth, and over the long term, drive down prices.
Operations commoditization - IT Operations are being automated with resources being provisioned via programmatic interfaces. As automation increases, prices will likely fall, availability will likely increase, and infrastructure variations (such as speeds, capacity, connectivity) will likely increase as Service Providers seek ways to compete.
Social connections. Metcalfe's Law states that the value of the network is proportional to the square of the number of connected users. The value of the Internet increases as people, devices and applications (or services) become connected. Thus, more people, devices and services get connected to the Internet to benefit from the increased value. As connections increase, on-line social networking and reputation become more important.
Global reach. A couple of decades ago, few would ever think of starting up a global business due to the time, complexity and expense involved. With the advent of global credit systems, such as VISA, global auction systems, such as eBay, shipping/logistic companies, such as FedEx, and large e-tailers, such as Amazon, it's possible to conduct limited business transactions across the globe. It's likely that many countries' corporate, tax and customs regulations lag behind this capability and that there will be improvements over the long term as countries find ways to accommodate more global e-commerce transactions.