Will Your Cloud Provider Be Around in 2011?

I was not surprised to see that CA has bought cloud infrastructure provider 3Tera -- I believe that 2010 will be the year of cloud consolidation, and we've only just begun.

This is CA's third major acquisition that targets cloud computing, including Cassatt last summer and Oblicore earlier this year. CA has long been a company that purchases its way into a space, and apparently cloud computing will be no different than other emerging areas that CA has entered through acquisition.

3Tera offers both public and private cloud infrastructures, available in a choice of cloud service or on-premise software. With this purchase, CA now has a true public cloud in its portfolio, and that's a very different model than its core enterprise software business.

The larger issue here is that we're entering into a buying frenzy around cloud computing technology, both public and private. I suspect we'll see this accelerate as stock prices continue to rebound, and thus management feels much better about entering into riskier deals.

Why so many, and why so fast? This is very different from the Internet bubble of the late 1990s, where most companies could exit through a public offering, even companies that had no concept of a business model or revenue. Today, going public is a near impossibility considering the regulations, and it's very expensive even after you go public, considering Sarbanes-Oxley and other laws that require compliance. So you start, you build, and you sell. That's the model for the next Internet bubble, which is being driven by the interest in cloud computing.

Who's next? Look around. If a cloud provider has any creditable technology to offer in the cloud computing space, public or private, and it has some customers and some revenue, somebody is knocking on its door with a suitcase full of money -- trust me.

If you are evaluating cloud computing technology today, you have to consider that your choice could be bought up this year or next. That means you need to make sure your legal agreements are rock-solid and spell out what happens if your provider is acquired. In other words, you need to make sure that having a different cloud landlord won't affect your business. Good luck all.

This story, "Will Your Cloud Provider Be Around in 2011?" was originally published by InfoWorld.

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