Good News, Bad News

In the cloud, that slice gets smaller and smaller, O'Brien said. But the bad news is that the cost of power gets larger and larger, he said.

"This [power cost] is no doubt the fast-growing piece of server TCO. So when you build out data centers to scale-I know that we're doing this, and Google as well-we're situating data centers close to cheap electricity, to get our arms around that power consumption," O'Brien said.

Some of these mega data centers are soaking up 100 megawatts of power at any given time, O'Brien said. "In data center parlance, those are huge," he said.

This all has direct implications on the public-versus-private cloud debate, he said.

"If you are implementing these cloud capabilities in a dedicated fashion, and you're doing so in a data center that has 1,000 servers, the numbers [due to power consumption] are interesting. We've actually modeled this out: A per-server TCO in a 100,000-server farm is less than half of the per-server TCO in a 1,000-server data center," O'Brien said.

So when a company implements a private, dedicated cloud system, they're going to do so-more often than not-on a smaller scale than a third-party public cloud provider, O'Brien said.

"You'll pay a TCO premium, if you will, and not get the full benefit of scale economies on the supply side," he said.

On the demand side, the issue cloud computing really solves is bad server utilization, O'Brien said.

"The thing that drives bad server utilization is variability of the underlying workloads-either unpredictable workloads or workloads that need to be provisioned for peak load," O'Brien said. "So this over-provisioning effect has put a lot of companies in a single-digit server utilization situation."

It's a fact that servers and storage arrays alike in any given data center commonly run at between 5 and 20 percent capacity. The unpredictability of workloads-often caused by good old-fashioned randomness, O'Brien said-force IT managers to over-provision for something unpredictable that might happen.

"The goal we want to get to is diversifying away all this variability," O'Brien said. "What you want to do is put as many applications, as many workloads-just like you would an investment portfolio-all in one place, and you get a much smoother, much more predictable curve [output]. In a public cloud, you can do that in a larger scale; in a private cloud, you can do it at a smaller scale."

Public cloud systems are set up for 85 to 90 percent utilization, O'Brien said. The benefits are obvious.

"The economic tailwinds are pushing us toward this public cloud model because the cost of computing is so dramatically lower, because of the supply-side scale and demand-side scale," O'Brien said.