The cheap, convenient cloud - A view from the Economist

This intriguing article looks at how as cloud-computing prices keep falling, the whole IT business will change.

Although the cloud makes up only 4% of all IT spending, it is growing fast, as most other parts of the industry are stagnant or even declining. By 2017 cloud spending will total $240 billion, Gartner predicts.
Today businesses are finding that the cost of putting their computing and data storage into the online cloud is getting ever cheaper. In the past three years prices are down by around a quarter, according to Citigroup, a bank; and further significant falls look all but inevitable. Some providers, such as Microsoft, have started providing their services free to startups, in the hope of turning them into paying customers as they grow.
This changing landscape means that there are now two kinds of IT firm: those native to the cloud, led by Amazon, on the one hand; and the incumbent sellers of hardware and software, on the other, which are struggling to adapt to the new age. Software firms are not just having to rewrite their applications so they can run in the cloud, but also to switch from a business model in which they get much of their revenue from large, upfront licence fees to one in which they receive smaller, recurring subscription payments.