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

timothy posted about a year ago | from the too-compute-intensive-to-fail dept.

Cloud 168

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."

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In other words... (5, Insightful)

sconeu (64226) | about a year ago | (#45093865)

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

Just like the stock market.

Re:In other words... (1)

Qzukk (229616) | about a year ago | (#45093875)

Yeah, someone said "There aren't enough middle men!" and is trying hard to figure out how they can keep us from just getting the services directly like we can now.

Re:In other words... (1)

girlintraining (1395911) | about a year ago | (#45093971)

Yeah, someone said "There aren't enough middle men!" and is trying hard to figure out how they can keep us from just getting the services directly like we can now.

If what's going on with Tesla Motors is any indicator... they'll just make it functionally, or actually, illegal, while screaming as loud as they can it's in the consumer's best interests. Heh. Like a company has ever said that in the history of all of humanity and it turned out it that they didn't have ulterior motives. :3

Re:In other words... (1)

lagomorpha2 (1376475) | about a year ago | (#45094091)

So how is NASA doing on that 'B Ark' project? I heard that the enormous mutant star-goat could strike earth any moment now.

Re:In other words... (0, Troll)

Anonymous Coward | about a year ago | (#45094269)

They'll probably go the way of Texas and get Republicans to pass a bill saying only authorized data dealers can buy from Amazon and everyone else has to buy from them. Funny thing about all the Tesla muckraking recently: the Republicans here in Texas have the biggest fucking hardon ever for middlemen, in all areas, not just auto sales.

By the way, I've been hearing tons about how the government shutdown is cutting off brewers ability to sell beer, why doesn't anyone ask Ted Cruz why the Republicans don't deregulate beer? I bet if someone did he'd have to spend the next 5 minutes adjusting his pants while stammering about green eggs and ham and how the bible says that people should only get drunk on government approved beer.

Re:In other words... (1)

Anonymous Coward | about a year ago | (#45094533)

Stupid Fucking Moron Alert.

Texas doesn't give a shit about Tesla. They have to play by the existing rules just like everyone else. No special treatment.

Only morons like you think Texas is excluding Tesla when in fact they are simply refusing to give Tesla special treatment.

The rest of your post is just more face painting homer bullshit.

Re:In other words... (0)

Anonymous Coward | about a year ago | (#45095131)

Texas doesn't give a shit about Tesla. They have to play by the existing rules just like everyone else.

On top of that, Texas already has the best laws money can buy! Who is Tesla to challenge that?!

Re:In other words... (1)

Anrego (830717) | about a year ago | (#45093943)

I'm a believer in eliminating the buying and selling of "stock" amongst investors. It's gotten so abstract and convoluted that it serves only to take money off the top of others work as you said.

I'll admit I haven't really thought this through, but I envision a system where buy into a company in the hopes that they do well, and make your profit when they do (or take the loss when they don't).

All this second sale stuff is artificial and I think needs to go, people are buying things whos only purpose (barring dividends) is resale for the same purpose. Everyone plays along because everyone wants to be the winner, but when you stand back it seems like absolute lunacy. Add in this automatic microsecond trading and it looks even more so. How is any of this befitting anyone in a direct manner.

Re:In other words... (1)

alen (225700) | about a year ago | (#45094131)

a lot of funds have rules where they are only allowed to hold stocks of certain company. it could be size, or sector or growth rate or whatever. if a company grows or does something to violate the fund's rules then the stock has to be sold. same with buying.

Re:In other words... (1)

Anonymous Coward | about a year ago | (#45094189)

Liquidity, liquidity, liquidity - under your model of ownership, if you invested in Microsoft in the the 80's, a disproportionate portion of your wealth would be tied into their stock in perpetuity, regardless of whether you still consider them a sound investment. I see where folks are coming from in disliking high frequency trading, but it is not too different from the Office Space fractional deposit scenario. If you are a long term investor, what do you care if you lose a few pennies on a trade? You are interested in meaningful long term appreciation not speculative day trading. It is the private individual day trader that gets hurt by automated HFT and frankly I'd have thought we'd have wiped out those idiots already after the dot com bubble.

Re:In other words... (1)

Anrego (830717) | about a year ago | (#45094379)

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

I do accept that there are a tonne of holes in this approach. Why would a company in that situation even declare any profit vice just dumping it all into internal stuff, etc. 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.

The original idea of a large number of people providing a small amount of money (and accepting a small amount of risk) for expensive and risky ventures (like merchant trips to the edge of the world to pick up some spices..) makes sense to me. I wish we could get back to some form of that.

Re:In other words... (4, Insightful)

JesseMcDonald (536341) | about a year ago | (#45095259)

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... (2)

umghhh (965931) | about a year ago | (#45095405)

it is not really the liquidity that is important in this but arbitrage. That is one thing for which trading in short period of time is important. The fact is also that the chunk of trade that is done by HFT fell of late. The reason being an aspect of market economy that is really interesting and seemingly fixed: if there is a imbalance somewhere like (I am making this up as I write it) oranges have lowest price on second Tue of Nov this imbalance will disappear as soon as somebody notices and starts taking advantage of it. The same seems to have happend to HFT and their profits decreased. This does not mean they will go away but that there will be only few companies left. Still the volumes of trade and the way it is done (if volume is big enough some exchanges give the traders insight into the 'future' in that they can see upcoming orders) are just silly - I suppose there could just as well be a limit on the speed transactions are done allowing trading say every second or so. That is enough for any reasonable market to provide arbitrage. I think HFT was a smaller of evils - big banks doing funny things with debt and amount of it - almost all western economies are so much in debt that it is hardly possibly to get out of that other than run printing press on high speed.

Re:In other words... (1)

superdave80 (1226592) | about a year ago | (#45094359)

I envision a system where buy into a company in the hopes that they do well, and make your profit when they do (or take the loss when they don't).

This pretty well describes the stock market. I buy a piece of the company, and if they make profits they give dividends (or the price increases and I can sell some or all of my stock to make money as well).

people are buying things whos only purpose (barring dividends) is resale for the same purpose.

I'm unsure how this is different from the system you envisioned in the previous quote?

Re:In other words... (2)

Anrego (830717) | about a year ago | (#45094429)

At the IPO level it makes sense to me, because you are essentially providing them funding.

After that, you are buying from another investor. And some day, another investor is buying from you. The money at this point is just bouncing around from investor to investor.

Re:In other words... (0)

Anonymous Coward | about a year ago | (#45094891)

>After that, you are buying from another investor. And some day, another investor is buying from you.
Or maybe another investor isn't buying from you, because maybe you bought stock for the purpose of earning dividends.

You could also buy small companies privately if you don't like the idea of people (or large firms, or algorithms, or mutual funds, etc) trading stock.
There is far less "bouncing" involved when it's not on an exchange.

Re:In other words... (0)

Anonymous Coward | about a year ago | (#45094981)

You realize companies can sell stock for cash after the IPO, too, right?

Re:In other words... (1)

dkf (304284) | about a year ago | (#45095477)

After that, you are buying from another investor. And some day, another investor is buying from you. The money at this point is just bouncing around from investor to investor.

Most normal stocks pay dividends regularly.

Tech stocks mostly aren't normal, for various reasons that come down to "lawful tax fiddle"; as a holder of a tech stock you're having to hope that the withholding of the dividend leads to a greater increase in value than you'd get from having the dividend payed out. Sometimes that works.

Re:In other words... (1)

gstoddart (321705) | about a year ago | (#45094665)

This pretty well describes the stock market. I buy a piece of the company, and if they make profits they give dividends (or the price increases and I can sell some or all of my stock to make money as well).

No, that's how the stock market used to work.

Now people expect to buy a stock, and have it grow linearly so they can sell it.

The stock market has become so horrible separated from fundamentals as to make it unrelated to the performance of the company. A company can have a good quarter but the stock goes down because they didn't have as good of a quarter as the analysts had predicted.

It used to be you bought a stock, and held onto it. If they were profitable they might pay dividends. Over time, the stock could go up.

Now investors just demand that the stock always goes up. The stock market has become a whole lot stranger over the years, and no longer has anything to do with actual valuation or performance.

Re:In other words... (1)

superdave80 (1226592) | about a year ago | (#45094755)

It used to be you bought a stock, and held onto it. If they were profitable they might pay dividends. Over time, the stock could go up.

Um, this is still how it works. I have several stocks that I have held for a long time, I have no plans to sell them, and they pay me a steady stream of dividends from their profits. The stocks have slowly risen over the years.

Now you could buy and sell your stocks every few minutes/hours/days hoping to make a buck, but the 'market' itself doesn't require you to do this. It is an individual investor's choice...

Re:In other words... (0)

Anonymous Coward | about a year ago | (#45095937)

Except that there are a whole bundle of companies out there issuing non-dividend-bearing stocks, or not declaring dividends. Sure, there's times that works out, but those times are not generally in a publicly-traded corporation.

Re:In other words... (3, Informative)

gstoddart (321705) | about a year ago | (#45094049)

Pretty much what I was thinking.

Then we'll have an entire market of speculators who define the price for us because they bought it six months ago.

Stupid idea.

Re:In other words... (2)

lgw (121541) | about a year ago | (#45094797)

As long as these futures are traded in real markets, with real market rules, no one will be cornering the market. All the really dirty tricks in markets are 100+ years old, and real commodities markets have structural protections against them.

OTOH, the scenario you describe can be a good one, if no one's cornering the market. A few years back, oil futures were so much higher than spot (immediate delivery) prices that speculators were buying oil, storing in in tankers that just sailed around, for delivery in the future. This drove up oil prices at the time, but significantly increased future supply.

Many people who don't understand markets cried foul "look at the evil speculators!" but that's bullshit. The best minds devoted to predicting future supply of oil had been warning of a serious oil shortage in a couple of years. The market responded by diverting some portion of current oil supply and delivering it to market when the shortage was expected. This is exactly what you want to happen.

Re:In other words... (1)

wiredlogic (135348) | about a year ago | (#45096059)

Then we'll have an entire market of speculators who define the price for us because they bought it six months ago.

More like 6 microseconds ago.

Re:In other words... (0)

Anonymous Coward | about a year ago | (#45094051)

Isn't this already happening with...er...unauthorized cloud services?

Re:In other words... (0)

Anonymous Coward | about a year ago | (#45095481)

Isn't this already happening with...er...unauthorized cloud services?

I was thinking that too... in between botnet customers you can run Primecoin nodes.

Re:In other words... (1)

Entropius (188861) | about a year ago | (#45094117)

Unless someone commits fraud, I don't see how connecting buyers with sellers is parasitism. It's a useful service, and like other useful services it is worth paying for.

Re:In other words... (1)

Anonymous Coward | about a year ago | (#45094219)

Unless someone commits fraud, I don't see how connecting buyers with sellers is parasitism. It's a useful service, and like other useful services it is worth paying for.

There is no need for middlemen, therefore it is not a useful service. Investment markets are like politically connected men putting up a tollbooth at the end of your driveway and saying that connecting you to the road is a useful service, and like other useful services it is worth paying for.

If so, don't use them. or the grocery store, gas.. (4, Insightful)

raymorris (2726007) | about a year ago | (#45094587)

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.

Re:If so, don't use them. or the grocery store, ga (0)

i kan reed (749298) | about a year ago | (#45094629)

Haha, you don't want to participate in culture in its exact form it exists right now, go live by yourself!

That's not an insight, it's lazy, and it ignores any institutional support that large middlemen get.

many forms are available, your choice (2)

raymorris (2726007) | about a year ago | (#45096133)

What do you mean "of you don't want to participate in culture in it's exact form as it exists right now"?
Right now, you can buy from a boutique retailer who buys from a distributor, you can buy direct from the manufacturer, or many choices in between.

I bought my last pair of glasses from 39dollarglasses.com. They are the same glasses the retailer in the mall will sell me for $160. The differences include - the retailer will measure the distance between my eyes for me, help me find a pair that looks nice, adjust them for me, and charge more. Both choices are "culture as it exists right now". Right now you can buy direct from the manufacturer who is 1,000 miles away, buy from a discount store, or a boutique shop. You can have it any way you want. Why do you insist that I also have to have it your way, that I'm not allowed to getvalue added by a dealer? What posesses you to need to take away the last bit if freedom I have left?

Re:If so, don't use them. or the grocery store, ga (0)

Anonymous Coward | about a year ago | (#45094745)

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

What of monopolies? What of ISPs, car dealerships, and yes, even grocery stores and gas stations?

It is a 'buy from middlemen or get nothing at all' world out there. Avoiding paying your tithe to the rent seekers of the world is anything but simple.

Re:If so, don't use them. or the grocery store, ga (1)

SleazyRidr (1563649) | about a year ago | (#45094771)

I had this discussion with someone else a few days ago. The thing that makes "middle-men" an undesireable thing is the value they bring to the table. Walmart brings me a lot of value, I can go to their store and buy the produce of several different farms, and several manufacturing plants. Getting everything I get from Walmart would require me to travel all over the country, so I'm quite happy to pay Walmart for their service.

Putting cloud services on an exchange doesn't create value. Currently I go to Amazon and buy cloud hosting directly from them. In the future, will I have to bid on cloud services on an open exchange, where I don't know what the prices are beforehand? Who will regulate the exchange? What if I buy some server time from the market, and the server crashes: who is liable? What is wrong with the current system that putting up an exchange will fix?

Re:In other words... (1)

SleazyRidr (1563649) | about a year ago | (#45094711)

Buyers are already connected with sellers. The only benefit this could possibly bring is allowing the cloud services providers to sell longer term contracts to the investors who would then take the risk of parceling them out to smaller time operators who don't want to finance a long term contract on their own. This sector is already quite well serviced by Amazon and other operators, so there is really no need for this "exchange" to ever realise.

Re:In other words... (1)

jxander (2605655) | about a year ago | (#45094941)

It becomes parasitism when you disallow the direct buying and selling of these services. (either through legal or practical means)

The model works perfectly fine as is. These people are proposing we add more layers to the equation, so they can find a spot to hide and take their 5% off the top for the service of adding more layers.

Re:In other words... (0)

Anonymous Coward | about a year ago | (#45095515)

The model works perfectly fine as is. These people are proposing we add more layers to the equation, so they can find a spot to hide and take their 5% off the top for the service of adding more layers.

In other words, by taking the millions of supercomputers, one on everybody's desktop, and turning them into dumb terminals by moving all critical infrastructure onto cloud-based services.

Cloud-based providers are middlemen too: they make their living off the margin between the cost of hardware when purchased at scale, versus the cost of building/running your own server room.

Re:In other words... (1)

jxander (2605655) | about a year ago | (#45096053)

That's already happening. That's a valuable service, and I'm perfectly comfortable paying for those services.

These guys are proposing we obfuscate the method, and inject themselves as middle-men who help navigate the obfuscated methods. Instead of going to Amazon.com and buying some amount of cloud computing ... I would go to "Reseller.com" and pay them to go get me the same amount of cloud computing, which costs the Amazon price plus a few "service fees".

And on it's own ... that could be useful. I don't think it will be, but the potential is there. But that's not where we stop. These middlemen aren't simply looking for a place from which they can siphon a bit of the money. They want to start gambling (because that's exactly what the stock market is) on the potential future worth of cloud computing. They want to be able to say "I own 3 teraflops of Amazon.com cloud," the same way people today say "I've got 100 shares of Google"

It boils down to a simple question : what's the benefit to the end user? The person shelling out money for cloud computing. What do they gain by this change? Are they better off simply buying the resources from Amazon (or whomever)? If so, are we going to block that avenue to force end users into this less-beneficial situation? Because that's exactly what I see proposed here.

Re:In other words... (0)

Anonymous Coward | about a year ago | (#45094295)

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

Just like the stock market.

Well, new jobs have to come from the ones we're replacing, right? Those who can't make the tech or use the tech will have to become leeches.

Re:In other words... (1)

np2392 (2800729) | about a year ago | (#45094455)

My initial thought exactly. Oh boy! More suit and ties getting rich off something they didn't create and don't understand, all in the name of "it's in the best interest of the consumer! Trust us!'. Gotta make sure little Johnny can put his business school degree to use and get rich quick right?

Re:In other words... (1)

dnaumov (453672) | about a year ago | (#45094613)

Except you've got things completely backwards, this would ELIMINATE a lot of the middle-men.

Re:In other words... (2)

Solandri (704621) | about a year ago | (#45094843)

Actually, I think this is what's going to make cloud services viable. The problem with data storage on the cloud right now boils down to two major things: Someone else has all your data. And that someone else might not be online at a crucial moment when you need your data. (If you're not online and access to your data is that important, you shouldn't have been storing it in the cloud or you should've had redundant network trunks installed.)

If cloud services became a commodity, you wouldn't need to be beholden to a single cloud service provider. You could buy storage space from several services, and link them together in something like a SAS RAID array. No one service would have all your data, and if you put an encryption layer on top of it the fragmented nature of what they did have would make it virtually impossible for them (or NSA) to extract anything meaningful from what you're storing remotely at a single or even two or three sites (depending on the number of virtual drives in your array). And because the data is stored with parity redundancy, one or even two services could go down and your data would still be accessible.

The problems with having virtual drives in different geographic locations are bandwidth and latency. Bandwidth is constantly improving, and in many places already exceeds the 10-20 MB/s of local SCSI drives 15 years ago. Latency will always be there, but the 20-100 ms ping times across a continent are within an order of magnitude of the latency of mechanical hard drives. Obviously if you're running some high speed service which needs instant responsiveness this isn't going to work. But for simple data storage on the cloud, it should be fine.

I actually came up with this idea a decade ago when Napster was shut down by the RIAA and decentralized services like Grokster sprang up. I started thinking of how binaries distributed on USENET were split into (say) 20 packets with 5 parity packets, and you could reconstruct the original binary as long as you got at least 20 of the 25 packets. Then I realized the atomic size of the decentralization didn't have an individual user - it could be a fraction of a user. The entire song could be hosted and downloadable from the cloud, but any one particular person could onnly be hosting 5% of the song and thus couldn't be accused of making the entire song available for download. (Hey if they can play semantics with the law to fine individuals downloading a single song hundreds of thousands of dollars as if they were commercial copyright infringers, so can I.) And parity redundancy means even if lots of people stop hosting, the song still remains available. Alas my career moved away from software so I haven't really been able to do anything with this.

Re:In other words... (0)

Anonymous Coward | about a year ago | (#45095399)

>If cloud services became a commodity, you wouldn't need to be beholden to a single cloud service provider. You could buy storage space from several services, and link them together in something like a SAS RAID array.

Nothing stops you from doing this now. The ONLY thing this proposal accomplishes is letting middlemen take a cut.

Re:In other words... (0)

Anonymous Coward | about a year ago | (#45095339)

Since all you Slashdotters are convinced these people are parasites, I expect to see two things happen:
1) The companies who buy these services will lose money to overhead, and then stop using these services.
2) You (IT experts) will not recommend that your company uses a cloud service who does this.
Right? It's not like you guys are the same people arguing against high-frequency trading or dark exchanges because you don't understand the economics...

Meanwhile, those of us who care if the price of cloud services goes up or down in the next few months might want to hedge our risk.

Futures market, maybe, not stock market (1)

Anonymous Coward | about a year ago | (#45096077)

Actually, this would be more like the futures market. Speculators can speculate, but infrastructure providers can sell their capacity out a few years and have a more reliable ROI.

Say, you have space for 10 machines. So let's say that is 500 "standard VMs" (eg. 1 CPU core, 1G, 10G disk) worth is selling at $5/VM/mo up to 3 years in advance. Assuming price is stable, that means the provider can sell access to the machines for next 3 years for $30,000. Sells the futures, boom, cash in the bank. Futures market allows guaranteed sale for providers and guaranteed access for users. It allows for efficient market.

Now who uses that for how much, who cares? The provider just needs to keep the machines up and running for 3 years. This may include keeping an extra two servers for hot standby that could be sold on spot market if they are idle.

Standardized market for VMs like this would be great. The only caveat is there would need to be a definition of standard VM. Without such definition, there could not be an efficient market.

Another note is some big players would definitely not want an efficient market in VMs. Efficient market would allow smaller players to compete with more recognizable brands - market like this *kills* brands. For example, do you care which company or farmer you buy your wheat from? Your oil? Your RAM? It''s all the same.

Blech (4, Informative)

Anonymous Coward | about a year ago | (#45093867)

What the hell would be the point of... any of that.

I have a hard enough time understanding why anything below the 1st sale market works, but what practical purpose does this serve.

Just sounds like yet another way for people to skim money off something without actually providing anything valuable. The benefits to the consumer given in the article seem pretty damn thin.

Also does the cost of computing really go up that often? When was the last time your VPS provider increased the cost of what you were paying for?

And finally, this all assumes providers are all interchangeable. I don’t see any motivation for that to happen. Providers want to build lock-in (or brand loyalty) like any other industry, which they do by offering provider specific tools and features.

I don’t consider myself a hippy, or a communist, but the more I see stuff like this, the more I think we really need to re-think the whole money concept. It seems to have outgrown it’s use as an abstract bartering tool and driven a massive amount of human potential into pointless and non-beneficial activities.

Re:Blech (2, Insightful)

WillAdams (45638) | about a year ago | (#45093911)

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

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

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

Re:Blech (1)

Brandon Butler (2829853) | about a year ago | (#45094495)

Couple of points: Providers don't necessarily have to be interchangeable - I think that's a misconception with this idea. Consumers will just use resources from whatever providers they buy the commodity from. They could choose to only buy AWS clouds, for exmaple, from this marketplace Federation would be ideal, but it's not a requirement for this to work. Here are some pros and cons of the broader plan though: Pros: Gives consumers a market on which to shop for cloud products in an apples-to-apples comparison Marketplace can lower prices for consumers Gives providers a market on which to sell their products, gives them access to buyers Gives providers a new funding mechanism for building out new capacity Cons: Potential for market manipulation Regulatory hurdles Cost savings will be eaten up by investors, will not be passed on to users Moore's law will render futures cloud commodities less valuable

Re:Blech (1)

hawguy (1600213) | about a year ago | (#45094697)

Couple of points:

Providers don't necessarily have to be interchangeable - I think that's a misconception with this idea. Consumers will just use resources from whatever providers they buy the commodity from. They could choose to only buy AWS clouds, for exmaple, from this marketplace Federation would be ideal, but it's not a requirement for this to work.

Here are some pros and cons of the broader plan though:

Pros:
Gives consumers a market on which to shop for cloud products in an apples-to-apples comparison

But only if the cloud providers *want* an apples-to-apples comparison. I suspect, that just like cellular provides, they will obfuscate their pricing so much so as to make it impossible for a simple comparison. Additionally, they'll add features that other competitors don't have - look at Amazon AWS, they have dozens of cloud products and services with rich API's. If you use those tools, you're probably not going to find them at Google Compute Engine or the Rackspace Cloud.

Re:Blech (1)

Mr. Flibble (12943) | about a year ago | (#45094861)

Given that I have a fair idea of how the money process works, I can see without RTFA how this could work.

Say you are in charge of a large enterprise project that will need a large amount of computing horsepower. You don't know when you will have these resources available to complete the project - but you know you need to hold the Virtual cycles in reserve because of budget and other reasons that occur with Layer 8 issues. So, you buy a large block of time - but you can't use that virtual processing time yet - so you sell it to someone else that can - and you decrease your loss on the holding time, but you can get that time back any time you need it.

Take that simple scenario, and extend it out - have various lenders holding various blocks of virtual computing and you have the makings of a futures market. This is what is done with corn for example.

The idea is exactly the same - the only difference is one is a farm, the other is a server farm.

Re:Blech (3, Informative)

Ryanrule (1657199) | about a year ago | (#45095549)

Rich douchebag kids of rich douchebags NEED JOBS!

Derivatives? (0)

Anonymous Coward | about a year ago | (#45093877)

I'm not working in the financial industry, but isn't the derivative market covering this one already?
Like buying an option to cover potential extra computing power during the holiday periods.

Fail (4, Insightful)

girlintraining (1395911) | about a year ago | (#45093883)

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:Fail (0)

Anonymous Coward | about a year ago | (#45094637)

They also steal your underpants.

This is already happening (1)

Anonymous Coward | about a year ago | (#45093893)

This essentially describes the Amazon AWS Marketplace where you can sell your unused reserved instances.

Reporter is an idiot (0)

Anonymous Coward | about a year ago | (#45093897)

Neither the reporter nor the editors understand the difference between a commodities exchange and a securities exchange. The article is just a random collection of words the writer thinks would look nice next to each other.

Re:Reporter is an idiot (1)

Delusion_ (56114) | about a year ago | (#45094821)

Sadly, I ran out of mod points a few hours ago.

+1 insightful

ObBetteridge (1)

Anonymous Coward | about a year ago | (#45093975)

No.

A taxpayer funded government Cloud Bailout . . . (2)

PolygamousRanchKid (1290638) | about a year ago | (#45093979)

. . . just what life is missing right now . . .

Re:A taxpayer funded government Cloud Bailout . . (1)

bob_super (3391281) | about a year ago | (#45094347)

For anyone who needed proof that the cloud bubble is maturing... let me introduce the vultures.

Because wall street works so well (0)

Anonymous Coward | about a year ago | (#45094011)

Wall street has ruined America. So let's do the same thing with computing. Brilliant.

"if the value of the resource increases" (3, Insightful)

VernonNemitz (581327) | about a year ago | (#45094071)

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.

Re:"if the value of the resource increases" (2)

girlintraining (1395911) | about a year ago | (#45094953)

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.

You know, they said the same thing about IPv4. Who'd ever pay to have an address? And they said the same thing about DNS. Well, here's the thing you don't get: Artificial scarcity. Why would you want to add more product to the market, crashing your margins, when you can keep it high and rake in the dough? It's not like just anyone can go and cloud it up. And you're forgetting the lessons of OPEC -- If you control production, you control the price. And demand naturally tends upwards because so does the population. There will always be more people tomorrow to buy your product than yesterday.

So don't kid yourself, man. People have made trillions by market manipulation. Where there are middlemen, there is manipulation.

Re:"if the value of the resource increases" (1)

VernonNemitz (581327) | about a year ago | (#45095297)

I know exactly what you are talking about, and was quite careful in my phrasing. To artificially restrict processing power on the Internet, one needs to be able to prevent people from arbitrarily adding servers; it really is that simple. However, there is another way for such a restriction to be done, besides what I already mentioned. The existing Internet has certain overall bandwidth limits, and once that is "full", adding more servers won't effectively add useful processing power. So, one also needs to prevent the addition of extra bandwidth (like new fiber-optic lines), to start increasing the value of existing-at-that-time processing power. So that is another thing for ordinary folks to be looking for, in terms of unethical actions by the greedy.

cloud services are not a commodity (4, Insightful)

alen (225700) | about a year ago | (#45094075)

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

Re:cloud services are not a commodity (2)

NoImNotNineVolt (832851) | about a year ago | (#45094471)

What you're saying is that cloud services are not fungible [wikipedia.org] .

That's the first thing that came to mind when I RTFS. This is just stupid.

Re:cloud services are not a commodity (2)

mlts (1038732) | about a year ago | (#45095197)

I can't see how cloud services ever could be made fungible on a large scale unless providers shared data centers.

A terabyte of storage on a data center close to me network-wise can be far more valuable than a chunk sitting on the wrong end of a 28.8 in Elbonia.

Then there are SLA models. A terabyte of storage stored on a spanned array on a bunch of USB drives is less valuable to one on a multi-path EMC VNX with a tier 1 (SSD) backend, replicating to another site in real time.

Of course, there is security. A terabyte of storage on someone's anonymous FTP server is a lot less valuable than a terabyte of encrypted storage via secure links and protocols.

If one takes a look at the building blocks of storage, not even they are fungible. A terabyte of space on an EMC VNX is different from one on a NetApp SAN. A terabyte of space on a FCoE LUN is different from one being sent via iSCSI, or a terabyte of storage plugged in via a USB port.

Then there are ways storage is accessed. For example, iCloud is not meant for tossing files on and sharing them. Instead, MediaFire would be a better candidate for that. For syncing between boxes, Dropbox is a solid candidate.

Storage has come a long way, but there are still way too many tiers before it becomes standardized to the point where one can say "one terabyte of storage" without any qualifications such as location, access, interface type, etc.

Re:cloud services are not a commodity (1)

Megane (129182) | about a year ago | (#45094597)

It's like investing in wheat, [wikipedia.org] and finding out what you really got was rescuegrass. [wikipedia.org] Hey, just look at those pictures, they look kind of the same, right?

Re:cloud services are not a commodity (1)

Brandon Butler (2829853) | about a year ago | (#45095543)

One of the companies proposing this idea has created a common trading metric – a way to compare resources from multiple providers in an apples-to-apple fashion to ensure one commodity is equal to another. It's called the Workload Allocation Cube, or WAC from 6Fusion and it takes into account CPU, storage and input/output speeds to create a common metric that is applicable across multiple providers. Some cloud providers have unique services making apples to apples comparisons difficult, but that doesn't prohibit a unique service from being sold on an exchange market as a futures commodity. The WAC, or some similar metric, could be used only on like products from companies.

Why can't I help but think... (0)

Anonymous Coward | about a year ago | (#45094081)

...that someone is trying way too hard to literalize the meme, "I'll give you 100 internets if..."?

Will Cloud Services One Day Be Traded ... (0)

Anonymous Coward | about a year ago | (#45094089)

No, but the data stored in them will be.

Memories... (5, Informative)

Shoten (260439) | about a year ago | (#45094109)

I remember a bunch of douchebags who managed to convince non-technical business leaders that bandwidth could be traded like this. They set up a whole trading market, pumped a bunch of money through it...I even worked for someone who managed to get us in to do a vulnerability assessment of their whole operation.

After we were done, the upper management of this company (the douchebags with the trading capability) came in, and shut down the meeting where we presented our findings...after which, they sacked the IT people who brought us in. Why, you ask? Because the whole thing was a sham, and the upper management was afraid it would get found out. The douchebags were Enron.

This sounds very similar to me.

Re:Memories... (1)

PolygamousRanchKid (1290638) | about a year ago | (#45094263)

The douchebags were Enron.

Sadly, the douchbags end up making money in the deal . . . and everyone else has to pay to clean up the mess that they have created.

Re:Memories... (0)

Anonymous Coward | about a year ago | (#45094343)

I remember a bunch of douchebags who managed to convince non-technical business leaders that bandwidth could be traded like this.

As soon as I read half the blurb I though of that bandwidth trading thing too. I wonder how many of the same individuals are involved.

Re:Memories... (0)

Anonymous Coward | about a year ago | (#45094737)

Get back to work and make more clouds! We've got a market to monitize....

D. Ouchebag, VP Cloud services and virtualization trading

Already here, I think (1)

Qzukk (229616) | about a year ago | (#45094113)

There are tons of companies reselling Amazon and other webservices, and they make good money by adding value like preconfigured images and other services like backup software that backs up to S3. I don't see why this is news now.

Oh wait, I get it, this guy wants to make good money without adding any value at all. Good luck with that, if he tries to corner the market in AMZN.S3 "stock" (capacity), Amazon's shareholders would happily vote for issuing more "stock" by buying additional capacity, and profiting heartily by selling storage on them too. Unlike stock, there's no intrinsic value to be cheapened by issuing more capacity. Without collusion, the speculator will be unable to raise prices on their block of capacity.

Re:Already here, I think (1)

kumanopuusan (698669) | about a year ago | (#45095473)

Unlike stock, [which have intrinsic value,] there's no intrinsic value [in storage capacity] to be cheapened by issuing more capacity.

Is this really what you were trying to say?

Fungibility kills this... (1)

SplawnDarts (1405209) | about a year ago | (#45094115)

This would actually be useful if it worked, but it faces the same problem as most would-be futures contracts: fungibility.

Fungibility is the property of one thing being like another, which allows them to be traded without worrying about which of the two you get. Stocks and bonds are fungible - you don't care what the serial # on your share of INTC stock is. They're all the same. But it's not clear that blocks of cloud computing or storage are fungible - is an hour on a Azure VM worth the same as an hour on a Amazon Web Services VM? Probably not.

This problem seems fatal to me.

Re:Fungibility kills this... (1)

disposable60 (735022) | about a year ago | (#45094183)

> is an hour on a Azure VM worth the same as an hour on a Amazon Web Services VM?
The Holy Market Forces will decide.
Until someone figures out how to game the system.
Remember Enron?

Commodity, not stocks (1)

goodmanj (234846) | about a year ago | (#45094147)

Cloud computing is a commodity, not a stock or bond. And the answer is yes.

The main obstacle is the lack of a common standard for cloud resources. It's only a commodity if it's interchangeable: wheat is wheat no matter where it's grown, but AWS and App Engine are very different things.

Who would do anything but short such a "stock" (1)

Anonymous Coward | about a year ago | (#45094161)

Really, when has the cost of storage or compute time ever gone up over a 12 month period.

Why would anyone pay extra for cloud services? (1)

MikeTheGreat (34142) | about a year ago | (#45094179)

Why would I go to a market to buy a service (with a middleman markup) when I could just buy it directly from a provider? Do we really expect to have shortages of computing power that would benefit from a secondary market redistributing computation around?

Not going to happen (1)

Animats (122034) | about a year ago | (#45094207)

Enron (remember Enron?) tried to do this for network bandwidth. Didn't work.

A futures market requires a standardized, fungible product, like oil or electric power. This is hard when the manufacturer or service provider controls the product definition. Rarely has there been a successful futures market in a manufactured good or service.

It's been tried. There's a futures market in cold-rolled steel sheet. But there's no futures market in cars or office space or air travel. Some airlines have sold options on future air travel to big customers; pay something up front and lock in the price. But those aren't tradeable.

Re:Not going to happen (0)

Anonymous Coward | about a year ago | (#45094399)

You can trade weather futures. Not a standardized, fungible product.

Useful for hedging against weather affecting other commodities.

beating Goldman at their own game! (0)

Anonymous Coward | about a year ago | (#45095437)

I worked for The Weather Channel for several years w/access to core forecasting systems. they were always talking about finding ways to diversify their revenue from just ads. when I heard about this (weather futures) it donned on me that this is one data stream to which I had access w/lower latency than Goldman and in theory should be able to insert some code in some key places to front ru... er, I meant "offer premium weather quote service for" the market. I knew if I were ever caught I'd be fired on the spot - not for committing a crime but for pocketing the proceeds instead of them going to executive bonuses...

now that they're owned by Bain & Blackstone I wouldn't be the least bit surprised if they haven't already implemented this...

Re: beating Goldman at their own game! (0)

Anonymous Coward | about a year ago | (#45096159)

now days the weather channel does not show weatheruch and local on the 8's has been cut down. cnn should been the one to take them over not nbc that messed up thw scifi channel

On demand (0)

Anonymous Coward | about a year ago | (#45094227)

I believe shares in CPU and bandwidth etc will rather be sold in microseconds than months and years. And it all will be done automatically, by algorithms.

It will be heaven for botnets and a return to ugly mainframes.

Are "cloud computing" resources fungible now? (1)

swb (14022) | about a year ago | (#45094335)

Are they? I mean, if the price today to run my workloads on Service A is $25 and on Service B $20, is there enough compatibility and flexibility to simply "vmotion" my workloads to whoever has the best deal that day? The same thing could apply to storage.

My basic understanding is "no" -- an Amazon VM instance isn't directly portable to Rackspace or some other service and the connectivity isn't necessarily fast enough to move the associated storage around that easily, either.

But will it get that way in the future to where you could just move your services around to whoever has the best deal, even if the timelines are weekly or monthly rather than daily?

I suppose there may be ways to do this now, but it might require a lot of intermediate layers that run directly on the respective compute platforms while the workloads are more platform independent.

Why would the value go up or down? (1)

jetkust (596906) | about a year ago | (#45094337)

Isn't all cloud storage pretty much equal and isn't there pretty much unlimited space by definition? These people are acting like they're selling real estate.

UUUmmmmmmm (0)

Anonymous Coward | about a year ago | (#45094387)

No

Permutation City (1)

Meneth (872868) | about a year ago | (#45094393)

The first half of Greg Egan's Permutation City [wikipedia.org] is set in a future where computation is a commodity. Storage and bandwidth, the more important parts of today's cloud services, are ignored in the novel.

Analogies with Electricty Markets (1)

scatteredthoughts (2880633) | about a year ago | (#45094501)

When cloud computing will become a non differentiable product, there will be a lot of analogies with the current electricity markets: electricity cannot be stored, or can partially be stored, and hence, like computing must be provided at the moment of request!

Laugh (1)

koan (80826) | about a year ago | (#45094675)

The monetization of literally *everything* continues, who in their right mind (besides the mentally ill financial participants) be interested in such a thing?

Version problems and vendor incentives (1)

Tablizer (95088) | about a year ago | (#45094779)

One of the problems that has to be solved is the version-combo problem.

For example, a given project may require version 1 of the database, version 1.5 of the language, version 2 of the OS, version 3 of the middle-ware, version 3.5 of Apache, etc etc etc.

Most cloud services don't support enough versions to handle specific matches, making swapping vendors difficult. You have to change versions to move your project, which often creates bugs and reprogramming effort when you move.

Also, there is no incentive for cloud hosters to make swapping/migration easy; because if they make it easy, you will leave them. Easy come, easy go. They thus pull various tricks and gimmicks to lock you in.

For example, they may give you a nice GUI/web console to make changes to configurations, but there is no accessible file version (or standard) of those config settings such that one has to manually re-configure any new hosting environment to match the old one.

A de-facto "file config police" has to be created somehow to create, enforce, and test such standardization, and vendors will resist using FUD.

The ultimate hedge - your own server! (0)

Anonymous Coward | about a year ago | (#45095041)

Wow, if this did happen, companies would start bringing machines in-house again. The cost of a few hours of bandwidth on the spot market would pay for a rack of servers. Would be a great hedge against this sort of thing, locking in a fixed-cost server rack over a 5-10 year period.

One Word (1)

The Cat (19816) | about a year ago | (#45095065)

Enron

I've heard this before (1)

InterGuru (50986) | about a year ago | (#45095355)

One if Enron's hare-brained schemes was to develop a market in bandwidth [internetnews.com] . It was one of the things that steered me away from investing in what was then the hottest stock in the market

Isn't that what the stock market does already? (1)

bpeikes (596073) | about a year ago | (#45095495)

You can buy shares in Amazon, Rackspace, etc. So if you want to profit based on value of cloud resources just buy or sell shares in the companies which provide the resource.

Wrong. (1)

viperidaenz (2515578) | about a year ago | (#45095655)

Computing resource isn't like money.

You can't use it when ever you please. If everyone wanted to use all their "compute blocks" at the same time, a provider could grind to a halt. They have finite resources. If they never allocated more than they could provide at once, they would never be fully utilised since the "cloud traders" would be holding on to some to trade.

Really? (0)

Anonymous Coward | about a year ago | (#45096073)

Super retarded idea!

Time to Start the next Enron.... (0)

Anonymous Coward | about a year ago | (#45096115)

Am looking for funding for the next Enron...

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