Will Cloud Services One Day Be Traded Just Like Stocks and Bonds?

Brandon Butler writes "Today, cloud computing resources are bought and sold in a fairly straightforward process: A company needs extra compute capacity, for example, so they contract with a provider who spins up virtual machines for a certain amount of time. But what will that process look like in, say, 2020? If efforts by a handful of companies come to fruition, there could be a lot more wheeling and dealing that goes on behind the scenes. An idea is being floated to package cloud computing resources into blocks that can be bought and sold on a commodity futures trading market. It would be similar to how financial instruments like stocks, bonds and agricultural products like corn and wheat are traded on exchanges by investors. Blocks of cloud computing resources — for example a month's worth of virtual machines, or a year's worth of cloud storage — would be packaged by service providers and sold on a market. In the exchange, investors and traders could buy up these blocks and resell them to end users, or other investors, potentially turning a profit if the value of the resource increases."

Comments

In other words...

[sconeu]

Let's take something useful, and let the parasites make money off of our work...

Just like the stock market.

Re:In other words...

[JesseMcDonald]

In my model of ownership, the stock itself has no actual value (because you can't sell it).

In your model of ownership, buying into a company, even a successful one, would be significant risk—you wouldn't be able to break even for decades, much less make a profit. Moreover, you would have to buy in when the company is formed, at which point the ownership is set in stone. We would be reduced to companies privately owned by a small number of partners; changing the set of partners or the division of ownership would require dissolving the company and starting anew. To raise money the partners would have to take out loans rather than selling shares. I really don't see any of that as an improvement over the current system.

It's more of a really high level view of how I wished it worked, that is, the money going directly to someone who is going to be doing something with it, rather than just bouncing around between other investors.

That's what happens when you buy shares at an IPO or (dilutive) follow-on offering. The money goes directly to the company, and you get a small measure of ownership in exchange. That only works if the shares are worth something after they're sold, though. No one would hand over money to the company without expecting to get something of value in return, which pretty much depends on being able to sell the shares eventually (even if all the actual profits come from dividends).

Re:In other words...

[rk]

If you have no right to sell what's yours, you don't own it at all.

Fail

[girlintraining]

In the exchange, investors and traders could buy up these blocks

Step 1. Get most of the major internet websites and businesses onto cloud architecture.
Step 2. Add middlemen between cloud providers and users who can arbitrarily increase the price of computational resources once they're locked in.
Step 3. Profit!

Re:Blech

[WillAdams]

The same point of allowing Goldman Sachs to ``invest'' in wheat futures:

http://www.foreignpolicy.com/node/775651

It's obscene that the laws limiting participation in futures commodities were lifted --- that status quo needs to be restored ASAP.

"if the value of the resource increases"

[VernonNemitz]

That's the crucial "if". Unlike most other commodities that businesses seek to control and restrict the supply thereof (such as stocks), processing power is expected to keep going up per Moore's Law for several years yet. Anyone investing now is not going to make money. After Moore's Law runs out, however, then it will depend on the total supply of processors that are built and connected as "cloud power". People would have to stop adding more to the Cloud for the Law of Supply and Demand to start increasing the value of that resource. And the only way that could happen is if brand-new businesses have no way of adding servers to the Internet --the design of the Internet itself would have to be changed. Therefore what average folks need to be on the lookout for is attempts by anyone to do just that --redesign the Internet to become a limited resource, rather than a resource to which just about anyone could add more processing power.

cloud services are not a commodity

[alen]

wheat, corn and other commodities are called commodities because corn is mostly corn no matter which farm you buy it from. food processors buy from lots of suppliers and mix it all together.

and commodities are mostly traded for price protection and risk reasons. if you invest say $1000 per acre to grow corn you want to be fairly sure that you can sell it for more than that when its ready to sell. that's what the commodity markets do, they match buyers and sellers who want to lock in their prices before the commodity is delivered to reduce risk. the speculators are a tiny percentage of the market

cloud services are not a commodity. amazon's cloud is different from salesforce which is different from google's cloud which is different from ADP

If so, don't use them. or the grocery store, gas..

[raymorris]

If aggregators, dealers, and other "middle men" don't offer you anything you want, don't use them. Simple.

Note that the grocery store, gas station, and just about every other business you use is a middle man. If the grocery store doesn't offer you any advantage over ordering items shipped directly from manufacturers and producers, you can make that choice. Sometimes, I order things direct. Most of the time, it's more convenient and cheaper to go through an aggregator / retailer like Walmart.

If you want some of the services of a middle man but not all, you have that choice too. Sam's Club and other warehouse stores sell cases at low prices, just like buying direct. Internet distributors are another in-between option. Yet, most of the time we prefer the services of a middle man, a retailer.

More on topic, I have bought, and continue to buy data services through a middle man. The backbone providers sell 10Gb connections. They aren't interested in the 50Mbps I want to buy. My retailer IS very interested in my 50Mbps account and they work hard to keep me happy. If there's a problem with one of the backbones, they have the expertise and the pull to get it fixed.