June 10th, 2008
Cloud computing meets capitalism: We all become a business of one
Folks spend a lot of time talking about cloud computing. It’s a move back to the mainframe. Cloud computing democratizes IT infrastructure. The cloud will be the reason Amazon and Google will be the dominant players on the Internet. You have heard a lot of it before. But the real impact of cloud computing may be societal– everyone becomes a business.
In a recent research note, Bernstein analyst Jeffrey Lindsay laid out a few deep thoughts on the intersection of cloud computing and capitalism. If you buy his argument–that anyone with just basic knowledge of the Internet will be able to start a business–there is a big societal hook impact involved with cloud computing.
Today, cloud computing is seen as something that enables startups–typically the venture capital businesses of more than one person. But we’re headed to the point where every one of us has a side venture enabled by the infrastructure of Google and Amazon. Lindsay’s theory is that everyone is good at something and that something could be turned into a business.
Lindsay writes:
A lot of new venture flowers are about to bloom and Google and Amazon are liberally applying the watering can. No government initiative or five-year strategic plan could have hoped to have achieved anything so profound - Google and Amazon are literally pushing the frontiers of global capitalism right down to the teenager’s bedroom. Forget cutting lawns or waiting tables to earn some money, the next generation of college kids are more likely to pay for tuition by showing the world how to play the riff in Weezer’s Sweater song by Rivers Cuomo - see our other Chart of the Week. This, incidentally, is an example of a conventional strategy used by www.discoverguitaronline.com where the user is shown a clip but can choose to click a link to a standalone site which has its own independent advertising, in this case with Reeves amplification products. Discover Guitar Online could easily have elected to have Google (and now DoubleClick) serve relevant ads next to their YouTube tutorials, most likely from Fender, Gibson and Ernie Ball Super Slinky strings and the like, but would have had to split the revenues with Google.
Now if you connect what Lindsay is saying along with a rough job market for teenagers–one of the reasons the U.S. unemployment rate spiked to 5.5 percent in May from 5 percent in April–you could conclude that parents should endorse lots of time on YouTube and perhaps a little entrepreneurship 101.
Another example of these micro businesses is Lauren Luke, who lives in Tyneside, U.K. She does YouTube videos of how to apply makeup. She puts on makeup, films it and gets an ad split from Google. What’s the big deal? Lindsay explains:
Now imagine for a minute how Lauren might have started up a business without YouTube. Remember she lives in South Shields. Shields and the region’s ship-building industry is long gone -think inner-city Detroit. Lauren might possibly have gone to college and worked in a beauty parlor. But what if she wanted to start up her own business? Would a bank have risked the money? Would M.A.C. have given her an advertising contract? Possibly her best shot at independence before YouTube would have been selling Avon products door to door. YouTube, however, has opened up a way to turn Lauren’s hobby, and something about which she is clearly passionate, into a global business. Perhaps the most interesting part of this story is that Lauren didn’t even know it was happening. The BBC recently produced a short documentary about her.
It’s deep stuff and perhaps a bit too touchy feely, but it’s worth a few minutes of pondering. Sure there’s ROI in the cloud, but perhaps the acronym we should ponder more is ROS (return on society).
Larry Dignan is Editor in Chief of ZDNet and Editorial Director of ZDNet sister site TechRepublic. See his full profile and disclosure of his industry affiliations.
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