Carr's 2008 book The Big Switch compared cloud computing with how electricity was generated a century ago, and his speech built on that. Back in the 1800s, individual businesses built their own power generators. Sitting next to a company, whether it was a steel mill or a factory, was its own power plant. The advent of Thomas Edison's direct current (DC) power allowed for the creation of power plants that let companies simply pay for it from a third-party. DC power had a short transmission length, however, and in 1910, 60% of firms still generated their own power.
It was the arrival of alternating current (AC) from mad genius Nikola Tesla that allowed for long distance power transmission. Now, we're all plugged into the power grid and our lights, appliances and computers are powered by giant utilities. Carr didn't have a modern day equivalent to Tesla, but believes AC has arrived in the form of cloud computing. "We are moving today to a different assumption, where more and more it capabilities and services and assets will be supplied as services over a network," he told the audience.
Computing power has become so cheap today, you can take things that existed as hardware, servers and storage, and turn it into pure software and run it on other computers, Carr said. "This is the essence of virtualization," he said. "The price of computing will go way, way down and accessibility of computing will go way, way up. That will force companies to re-think how they build their products and connect with customers."
He quoted Eric Schmidt, current CEO of Google, who said back in 1993 when he was CTO of Sun Microsystems: "When the network becomes as fast as the processor, the computer hollows out and spreads across the network."
The Internet is becoming exactly what Schmidt predicted, Carr said, "a shared computer everyone can tap into and use for whatever, and at a price much cheaper than before."
Moving to on-demand computing means a much greater pairing of capacity and demand, as companies will pay for what they need, as opposed to maintaining this steady amount of capacity that's sometimes underutilized, other times over utilized. Capacity can adjust to customer needs and they only pay for what they need. To illustrate his point, Carr cited a big computing job at The New York Times. The venerable newspaper had scanned all of its issues dating back to the mid-1800s in TIFF file format, which is very big.
Faced with converting 4TB of TIFF files to something more usable, an IT staffer at the Times rented time on a 100 virtual machines on Amazon EC2 to convert all the TIFF files to PDF, which is smaller, lighter and easier to transfer over the Internet. The job was done in 24 hours and cost $240. It was a lot cheaper than tying up Times company servers for hours or days on the conversionassuming the company had the horsepower to spare.
"I don't think companies have realized what this is going to mean," said Carr. "Not only what they can do quickly and cheaply without having to make a big investment, but the IT department won't be the bottleneck for big computing jobs within the company."