Google App Engine Latest Example of Drastic Change for Corporate Apps

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Of course, there always will be corporate data centers. The launch this week of Google App Engine is a further sign, however, that fascinating trends are redirecting the evolution of these digital repositories.

Even as applications and the data they use become more sophisticated, there is a growing case for bypassing tightly controlled internal infrastructure in favor of Internet-based services that leverage massive economies of scale to store these applications more cheaply and, arguably, more efficiently.

This trend is ongoing. App Engine and others -- including Amazon Web Services, Salesforce.com and Box.net -- collapse the logical separation between a company's internal structures and the world (or cloud) beyond. Small, cash-strapped companies are the first step. It is only a matter of time, however, before this is the way that business gets done.

It is impossible to separate this structural change from the even broader move toward convergence. The applications that are being stored, managed and made available to millions of people through App Engine and others often are complex mixes of voice, video and data. Indeed, as we reported earlier, App Engine is being called a step on the way to Web 3.0 (Web 2.5 will do for now, it seems).

This long and insightful reaction to the Google announcement at Read, Write, Web looks at App Engine from the perspectives of scalability, data portability, advertising and services with which it fully or partially competes.

The first part of the piece -- which links to the official Google introductory video at YouTube -- discusses the context of what is happening in the context of Nick Carr's book The Big Switch. The idea is that computing is going through the same transition that the electrical industry did a century ago. At the start, businesses each had their own in-house generating capacity. Slowly, separate independent utilities made power a commodity. Carr, who wrote Does IT Matter?, says the same thing is happening in the computing sector. The announcement reinforces that idea.

The reaction to the Google move naturally led people to comment on the comparative strengths and weaknesses of what the company is offering. The commentary at Seeking Alpha is negative, but not vehemently so. It highlights the facts that the only programming language supported by App Engine is Python and quotes an expert who says the project simply is mimicking what Amazon has created. The very existence of these divergent points of view shows that there is a tremendous amount of innovative work focusing on bringing functions formerly cloistered deep within the organization onto the Internet.

The outsourcing of these functions to other companies raises concerns about the security of customers' intellectual property. The bottom line is that in many cases the customer is trusting its most important asset -- its code -- to an organization that is highly entrepreneurial and may be tempted to take a peek. This raises red flags for this blogger, who asks intuitive questions about App Engine's Terms of Service.

The environment is another driver. Google, Amazon and the rest know data centers and how to run them efficiently. They also are conspicuous, so it is in their interests to run in as green an operation as possible. The bottom line is that centralizing multiple companies' operations in a common data center, albeit a big one, is more efficient than replicating large-scale overhead items such as cooling and electricity across multiple smaller buildings.

The reality is that the most valuable things that a company owns -- its ideas, applications and data about customers -- are heading to the Internet. The fascinating thing the shift seems simultaneously to be seismic and inevitable.