Can You Buy and Sell The Cloud’s Future Value?

Can you put a value on cloud capacity three months from now? A number of people think you can. In other words, one day businesses may be able to buy and sell cloud computing capacity before it’s needed. But what would be involved? That’s what a panel of cloud practitioners and financial experts explored in San Francisco this summer.

You’ve probably heard about trading futures in pork bellies or corn. These folks were talking about buying and selling futures in cloud computing. Essentially, futures are agreements to trade a commodity at a set time, for a set price. Say you want to buy 5 tons of corn for $10 a ton on September 15. You’d find a supplier who’d agree to those terms. If the price of corn moves to $12 by the purchase date, you’ve won – you still pay $10. But if the price drops to $8, you lose. You’re committed to paying that locked-in price.

The potential for this kind of market was demonstrated as far back as 2009, when Amazon announced its spot pricing for its Amazon Web Services’ EC2. However, if Amazon’s move showed what was possible, the debate continues on when, and how, a robust marketplace may emerge.

During the discussion, a number of arguments emerged on each side of the issue. Among other things, proponents argue that a cloud futures market could reduce the risk for operators and encourage greater investments into infrastructure. On the other hands, skeptics say it would be difficult to measure the value of cloud capacity for sale. It’s challenging, they point out, to band together storage, network and CPU as one unit to be traded, since each of them include several components that can change before an actual transaction takes place.

Either way, it’s an intriguing prospect. To learn more, watch the discussion’s highlights in the video. We’ll post the full conversation soon.

Comments

  1. BY James Mitchell says:

    Anyone interested in debating this subject further is welcome to join the conversation at http://www.cloudmarketforum.com

  2. Pingback: Do CIOs value their Cloud Options? – Cloud Options

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