Cloud Computing and Electricity: Beyond the Utility Model

Networks, the Internet, and Cloud Computing, Cloud Computing and Networks and Infrastructure

Article Snapshot


Erik Brynjolfsson, Paul Hofmann and John Jordan


Communications of the ACM, Vol. 53, No. 5, pp. 32-34, May 2010


Compares services provided by cloud computing firms to those provided by electric utilities.

Policy Relevance

Regulation of cloud computing services must account for the differences between this market and traditional utility markets.

Main Points

  • Cloud computing, like electricity, is a general-purpose technology-- not a discrete tool but a platform on which many different tools, or applications, can be constructed.
  • Cloud computing is characterized by economies of scale which make large-scale production and distribution attractive. These include administration, and proximity to low-cost power sources.
  • Computing technology is evolving much faster than electricity production and therefore requires more careful attention and skill to manage.
  • There is a tradeoff between consistency and scalability. That is to say, either the system is highly responsive to an increasing volume of demands but doesn’t consistently provide access to all data; or the system consistently provides access to all data but lacks speed in its responsiveness.
  • Large companies with private clouds get the best of both worlds. Intel, for example, is consolidating its data centers from 100 eventually down to 10.
  • Many of the benefits from cloud computing come from the co-invention of dependent technologies such as Apple’s iPod and iTunes.
  • Cloud computing cannot achieve the plug-and-play simplicity of electricity, at least, not as long as the pace of innovation, both within cloud computing itself, and in the myriad applications and business models it enables, continues at such a rapid pace.
  • It does not appear that the market for cloud computing services will behave like the market for utilities anytime in the near future.

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