If you listened to our annual Appistry Predicts roundtable, you heard Appistry’s Kevin Haar, Sam Charrington, Bob Lozano and Michael Groner give their two cents on some of the key issues the cloud computing community will face in 2010. We had some great discussions sparked by lively audience interaction and Tweeted questions that we just couldn’t keep in the vaults.

For all those who missed the webinar or are keen on the written word, we had the session transcribed and will be featuring our discussions on this blog in a 5-post series. Over the next few weeks will be sharing some of our most insightful conversations on the future of cloud in the enterprise. Topics discussed will include: “Cloud and the Economy,” “Cloud Growing Pains in 2010,” “The Role of the Platform Layer,” “Data in the Cloud” and “A Word from the Audience.

Cloud and the Economy

Sam:  Let’s jump into the predictions for 2010. The first is yours, Kevin. You get an opportunity here to make up for the HP one. And it’s really all about where do you think market’s going, the big picture. Talk about that for us.

Kevin:  Yeah. And this one will be hard enough to prove one way or the other next year, so I’ll be able to declare victory.

Kevin:  But I think, even if the economy just shows modest signs of life, I think that in 2010, we’re going to see some pretty interesting dynamics in the cloud‑computing space. And that’s especially true, I think, given our focus on the enterprise and the Fortune 1000 environments, where I think you’ll see a lot of movement.

The economy has really caused people to hunker down for the last couple of years, and the focus has really been on eliminating costs. And that’s been more so finding any way to throw costs overboard, anything that’s not nailed down. It’s not really been in terms of major shifts in technology for the enterprise. And I think, as the economy improves just a little bit, that’s going to start to change, as I think people look for ways to see more benefits by making some more fundamental shifts to lower costs.

And you would think that more buyers would typically drive prices up. But I don’t think that’s true in a market that’s commodity‑driven and capital‑intense, like the infrastructure‑as‑a‑service marketplace. In that marketplace in particular, I think you’re going to continue to see, it’s the race to zero relative to the CPU hour, and more activity’s going to really increase that pace, as people try to work hard to fight for market share. Because, in the end, what’s going to drive that business is people capturing market share and capturing just customers.

I think there’s also an issue relative to software and support charges, because I think customers in 2010 are going to get more cloud‑savvy, and I think they’re going to push for pricing to be more attentive to real usage. And that’s where I think that the idea of perpetual licenses, or even annual subscription licenses and annual support, or even enterprise licenses, those concepts will probably still hold.

But I think, as you peel away the onion on that pricing, that people are going to have to be a lot more sensitive to what has become the real time constant, which is the hour. Maybe it’s the minute. Maybe it’s the week. But it’s a much shorter time frame, and I think people want to understand how they’re getting benefits for these acquisitions relative to usage hours.

Sam:  So, one of the things you hear about a lot in cloud, that in some ways is supported by this whole race to zero, is the idea that in the end, at least when we’re talking about public cloud, the world kind of consolidates to a handful of public cloud providers. And the list is usually Amazon, Microsoft, Google, and the last one or two are usually occupied by whoever’s making the claim, right? They put themselves in that list of survivors. Do you see that happening? Or what’s your picture of reality there?

Kevin:  I think, for the next 10 to 20 years, to me that’s kind of akin to the feeling in the mid to late ’80s, early ’90s, that AOL would dominate the Internet, right?

Sam:  [laughs]

Bob:  Well, that’s one that you can be right on that it didn’t happen, right?

Kevin:  Yeah. And I predicted that in 1999.

Kevin:  But anyway. Yeah, I just don’t see that happening. And it may happen for certain application types, so you may see it in certain verticals. But, overall, I think that that general trend or that general belief in the marketplace is misplaced, to be polite.

Sam:  So who do you think wins here? Who do you think loses? Certainly, some of the bigger, more established vendors, how are they even going to adjust to this whole new pricing notion?

Kevin:  When you look at software vendors in particular, and you look at the way the mindset will shift because of cloud computing, I think it’s a pretty tough transition for software suppliers.

So, whether you’re selling support, subscriptions, perpetual licenses, I just think that when you get to the point where customers are thinking about being able to do cloud bursting or have hybrid clouds and being able to, as some of our customers are doing, jumping out and grabbing 900 cores of processing power for a half a day and then leaving it alone, that just takes a different kind of pricing model. And I think it’s going to be very difficult for the software industry to figure out exactly how to deal with that.

Register for a free download of the full webinar here. After registering you will be able to watch the full event online, view the slides, download the audio, or even grab an iPhone-compatible version for your next flight.

Stay tuned for our next installment, “Cloud Growing Pains in 2010.” See you then!