Listening to the debate about cloud computing and the possible impact on jobs within technology companies has me thinking that perhaps the wrong question is being asked. It's not IF cloud computing is going to take hold, it's when. The real question is what will you do with it?
This debate reminds me of the questions I use to get in the 2001-2004 time frame about Open Source in the enterprise. Many CIOs would ask me if I though anyone was using open source software for actual enterprise systems. My typical response was to ask them about the commercial software they were running. Almost invariably they would name a product that had significant open source components. The same thing is happening now, with Web 2.0 applications being used in the enterprise. Many companies are jumping into secondlife to do group events or using Twitter to notify groups of non-critical news and events. I even heard recently about a municipal fire department who is considering using twitter as an alternate method of notifying the community in the event of an emergency. And yes, you guessed it, both of these two examples run on the Amazon Web Services cloud computing environment.
Where does this leave us? It's just another turn on the technology innovation and destruction cycle. As we push older technologies (read operating systems) down further into the stack, it's going to continue to get less mission critical and less expensive. Geoffrey Moore described this process well in his 2005 book, Dealing with Darwin.
Can the cost of servers be driven down to zero? Yes, absolutely, if a disruptive technology comes along that let's us run software in thin air. Until then the cost of computing cycles will continue to drop in a steady rate. The next iteration has already arrived. We will see most applications in the cloud running in an on-demand application service within a few years. Google app engine is the first into that game but there are sure to be more coming quickly.