Cloud Computing

During the dot-com boom, there was a TV commercial that showed a web company launching and immediately getting swamped with sales. Being able to scale up quickly in the Internet age when word can travel so fast online has been a challenge for startups.

But now a new technology — called "cloud computing" — is making that much easier. It lets companies rent servers, paying as they go, the same way you'd buy electricity or water.

WBUR's Business and Technology Reporter Curt Nickisch investigates the possibilities.

TEXT OF STORY:

CURT NICKISCH: Let's just say Tom Clifton has a much better idea of what the word viral means than he used to. He's the creative director of Animoto. It's a little web company, based in New York now, though Clifton came up with the technology in a Cambridge coffee shop. Basically, Animoto-dot-com lets you upload photos and say what your *favorite music is, then Animoto turns them into a video.

UP FULL MUSIC VERY BRIEFLY, THEN UNDER AND OUT BY **

NICKISCH: Not your run-of-the-mill slideshow, but a real video with cool effects and movement that match the mood of the music.** That takes a lot of computing power.

Well, two months ago, Tom Clifton says Animoto was making these videos for web users at the rate of about five per minute.

TOM CLIFTON: Sometimes it would go all the way up to ten videos per minute, maybe all the way up to fifteen. During those times we were kind of freaking out: we're like oh my goodness can the system handle it?

NICKISCH: Then last month Animoto put its application up on Facebook, the social networking site. That's where the viral part comes in.

CLIFTON: Before we know it we've hit a hundred videos per minute. And of course we all take screenshots of our little metrics that say one hundred videos per minute, and we think this is it! And we sent around our screenshots — we've made it! A hundred videos per minute. Of course little did we know the next day, two hundred videos per minute, then three hundred videos a minute, then FIVE hundred videos a minute — And by the next evening or the day after, we topped at like six hundred videos a minute, which is mind-boggling.

NICKISCH: This would have boggled the business just a year or two ago. It used to be that companies had to buy their own servers up front, and guess how many they'd need. It cost a lot and never quite worked out. Too many, you waste tens of thousands of dollars. Too few and your site crashes just when people are flocking to it.

But Animoto was one of the first companies to try new web services from companies such as Amazon, Google and Microsoft. With so-called cloud computing, businesses just rent part of those huge server farms, ramping up or down on the fly. At peak demand, Animoto was using more than five thousand Amazon servers. It cost a few grand that week, but Animoto never had to shell out tens of thousands to buy all those servers, hire a network administrator and pay ongoing expenses.

FRANK GILLETTE: Very, very different math.

NICKISCH: Frank Gillette is a tech analyst at Forrester Research in Cambridge.

GILLETTE: That fact that you can do a startup with just a credit card and an Amazon account is a big deal!

NICKISCH: A big deal, because it's encouraging a new wave of startups. Sim Simeonov is a partner at the Waltham venture capital firm, Polaris. He says twenty-five percent of the companies that come to him now plan to use cloud computing. A year ago, it was practically zero.

SIM SIMEONOV: It is truly a change. And I expect that percentage to keep increasing.

NICKISCH: Simeonov loves it because young companies spend more of their money on their technology, not on all that pesky hardware. It also means they're farther along when they come to him for more funding. And Simeonov says because it's so affordable to try new ideas, more people are doing it.

SIM SIMEONOV: It creates a very Darwinian environment where people can try lots of different things and see what works, in a very quick and efficient manner. And as we like to say, if you're going to fail, you want to fail quickly and cheaply.

NICKISCH: In end, Simeonov say consumers are going to end up profiting. He says there are going to be some great web technologies that come out of this new entrepreneurial breeding ground — ideas that without cloud computing never would have gotten off the ground.

For WBUR, I'm Curt Nickisch.