Prediction for 2010: The coming cloud crash

Cloud computing enthusiasts should pause. Next year, computing services handled remotely and delivered via the Internet may undergo some kind of “catastrophe” that alerts companies and consumers to the risks of relying on the so-called cloud, says Mark Anderson, chief executive of Strategic News Service, an industry newsletter circulated to senior executives at technology companies including Intel, Dell, and Microsoft.

BusinessWeek’s Arik Hesseldahl writes that a growing number of businesses and individuals are handing storage and various other tasks to outside providers, from photographers archiving pictures with Yahoo!’s Flickr to companies turning over complicated computing operations to Amazon. Tech prognosticator Anderson suggests that the tendency could backfire in some high-profile way in the coming year. “It could either be a service-outage-type catastrophe or a security-based catastrophe,” he says. “In either case, it will be big enough. It will be the kind of disaster that makes you say, if you’re a [Chief Information Officer]: ‘That’s why I didn’t get involved with the cloud.’”

The warning on cloud computing is one of a handful of predictions from Anderson, who in December makes forecasts for the coming year. He also says computing wars will intensify in hardware and operating systems, especially in the mobile arena. Growth in netbooks and smartphones and increased reliance on cloud computing will continue to transform personal computing from the market dominated by Microsoft’s Windows and to a lesser extent Apple’s Mac. “The desktop will seem like a calm island that is surrounded by chaos, where all these opportunities are with no clear winners,” he says.

Hesseldahl notes that Anderson is particularly bearish when it comes to the cloud. “My hunch is that there will never really be a secure cloud,” he says. Businesses will view cloud services more suspiciously and consumers will refuse to use them for anything important, he says.

Cloud computing experts note that high-profile security breaches have already occurred. “Clouds don’t make applications fail-safe,” says Chris Hoff, director of cloud and virtualization services at Cisco Systems. He points to Magnolia, the social bookmarking service that crashed and lost all its data earlier this year. “There will be other events like these in 2010, as there were in 2009 and 2008,” Hoff says.

Still, many companies will conclude that the benefits of network-delivered services outweigh the risks. “Even if there is an outage, it won’t affect adoptions,” says Rich Mogull, an analyst at Securosis, a security research firm. “Providers who compete with the vendor [that] goes down will come around and tell everyone how they’re different. There will be some pullback but no dramatic change in adoption of the cloud.”

By the way: How accurate are Anderson’s prognostications? Last year he predicted that voice-activated applications would come to smart phones, harnessing computing in the cloud. He forecast that the wireless industry would settle on a technology standard known as LTE, or Long-Term Evolution, for its next-generation technology. He also predicted that mobile applications such as those on Apple’s iPhone would catch on like wildfire.