Reporter's notes: Cloud computing conference

The Under the Radar cloud computing conference was abuzz with entrepreneurs and venture capitalists. Is this where the start-up money is gathering?

I was at the Under the Radar cloud computing conference on Friday. I didn't have the chops to evaluate most of these companies, and certainly not based on their brief 6-minute pitches. Watching the demo of Cloudkick, for example, which is showing a new tool, Cloudshift, that lets you transfer an app from one cloud service (like Amazon EC2) to another (like Slicehost) is impressive, but you can't tell how well it works in the real world from the pitch.

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I'm not the only person here who's skeptical. At a panel discussion this morning, corporate IT execs expressed a hesitancy to adopt cloud services in their businesses, in part because they're afraid of the cost of adopting the services. Other IT execs fear the security of cloud services. It is, however, unlikely they'll be able to stop the cloud from coming into their companies. Just as PCs, wireless networks, and smartphones have come into the enterprise, and most importantly latched onto corporate networks behind firewalls, cloud services are coming into business as non-IT personnel pay for services on their credit cards and hook them into their workflows.

Judges Peter Cohen, Sunil Dhaliwal, Lew Moorman, and David Powers consider a start-up's pitch at Under the Radar. Rafe Needleman/CNET

This is freaking some CIOs out, says Oren Michels, CEO of Mashery, which helps companies manage API access to services. He recommends embracing cloud apps. "When CIOs block productivity, they're screwed," he says. For companies building cloud-based products, likewise, his advice is to forget appealing to the CIO. "There is no way in a start-up's time horizon that they're going to be selling to CIOs," he says.

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Matthew Glotzbach, director of product management for Google Enterprise (and one of the judges on pitch session I was moderating), says IT execs are bifurcated. "Some get it, they're putting the controls in place and encouraging use of the services."

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Rackspace, traditionally a hosting company, is splitting the difference. It's getting with the cloud program, but is not giving up its traditional service of providing actual physical machines locked in server cages for their customers who want them. Lew Moorman, Rackspace's chief strategy officer, is running the company's cloud business. The company recently reported that under 10 percent of its business is coming from its cloud-based application hosting services, Cloud Sites, Cloud Servers, and Cloud Files, but Moorman told me that the cloud business is growing at over 100 percent a year. He declined to project when the "lines will cross," and Rackspace's cloud business will overtake the hosting business it was originally based on.

But he does believe it will happen. Many businesses, he says, will need both traditional hosted services, where they have near absolute control of their computing environments, and cloud services for more run-of-the-mill apps and for services that have highly variable usage patterns or that need to be brought online very quickly. "The cloud is for everyone, but not for everything," he says, even though, "it is the ultimate productization of hosting."

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The moderator's view of a pitch. This is Heroku's James Lindenbaum. Rafe Needleman/CNET

I moderated two sessions. In the first, three Web app testing services presented: SauceLabs, which runs your Web app testing scripts against multiple browsers at the same time; uTest, a marketplace for professional beta testers; and Zephyr, which manages testing programs. SauceLabs had a great pitch. uTest is basically a product testing service, except you never know exactly who will be doing your testing.

I also moderated a session with four application development companies. I liked best Twilio, which pitched its super-simple solution for creating voice/touchtone apps that run over phones using well-known Web development techniques.

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I always see venture capitalists at these Under the Radar events, but this one is full of heavy hitters, folks I generally only see at the high-end conferences like D and Demo. One VC who traditionally invests in consumer Web companies, Jeff Clavier, told me the reason he's here is that nearly all the companies he's been looking at are using cloud services for their infrastructure. He's following the money, as are the other investors here.

In the current economy, the allure of cloud services is in part financial. As investor Kent Goldman says, with cloud services, "everything that was a fixed cost becomes variable."

 

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