Steve Clayton, a blogger working in the Software + Service field at Microsoft, criticizes the term "private cloud" in his latest post. He cites Joe Weinman, who claims in his article 6 Half-Truths About the Cloud:
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By analogy then, a “private cloud” makes as much sense as would be something like a “personal hotel". This is more than semantics — it’s economics.
I am not sure if the term "personal hotel" makes sense, but "private hotel" does. Some organizations own hotels at which only their members can stay.
I think that Joe Weinman and Steve Clayton made the mistake of interpreting "cloud computing" as an economic term. In their view, cloud computing is a new kind of business that provides a certain service to the public. Therefore, private clouds seem to make no sense at all.
However, "cloud computing" is most often used as a technical term. It is a new technology that can be used for different purposes. You can make a business out of it, companies can use it in their data centers, and you can also have it in your garage.
This doesn't mean that the term "cloud computing" is always used in the same way. It is a relatively new technical concept, so it is only natural that people aren’t using it consistently and often disagree as to its meaning.
In my view, cloud computing introduces a new virtualization level in IT. In the beginning, there was only hardware virtualization. For example, the virtualization of a hard disk is a virtual disk. Hardware virtualization allows you to run multiple operating systems on a computer. The point about hardware virtualization is that multiple operating systems share a certain piece of hardware.
The next step is what could be called location virtualization. If you only do hardware virtualization, you still know on which computer the guest operating system is running. But if the virtual machines location is virtualized, it doesn't matter anymore on which host the guest OS resides. This doesn't mean that the OS isn't actually running on a specific computer. The point is that the system administrator doesn't have to care about the location of a virtual server.
For me, cloud computing is nothing more than "location virtualization". This kind of virtualization is not only about the operating system. You can also run a specific application in the cloud, say Internet Information Server. The main point about Windows Azure is that it doesn't really matter on which machine your web server is running. Virtualized servers in the cloud don't just share a piece of hardware, they share multiple machines or a whole data center.
The advantage of cloud computing is that it scales much better than hardware virtualization. With hardware virtualization, the administrator still has to move a virtual server manually from one computer to another if performance problems arise. Some server virtualization solutions can do this more or less automatically, but the admin is still aware of the location of a specific server. In cloud computing, the location of the guest OS or virtual application becomes totally unimportant. Scalability here means that you only have to add a new server to extend resources and let the cloud OS do the rest.
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Therefore, private cloud computing makes a lot of sense. It even makes sense for small businesses with only a couple of servers. Rest assured that Microsoft and others will soon offer the corresponding technology for private businesses. Perhaps one of the successors of Virtual Machine Manager will just be called Cloud Manager.