I recently read a Bank of America Merrill Lynch report about cloud computing, and they described private clouds as "old wine in a new bottle." I think they nailed it!

The report points out that a typical private cloud set-up looks much the same as the infrastructure components currently found in a corporate data center, with virtualization added to the mix. While the virtualization provides somewhat better server utilization, the elasticity and efficiency available in the public cloud has private clouds beat by a mile.

In short, the term "private cloud" is usually just a buzzword for virtualized internal environments that have been around for years. By replicating existing data center architectures, they also recreate the same cost and maintenance issues that cloud computing aims to alleviate.

Despite their limitations, there is still a lot of industry talk about creating internal private clouds using equipment running inside a company’s data center. So why do people consider building private clouds anyway?

To answer this question, you have to step back and examine some of the fundamental reasons why people are looking to cloud computing:

1. The current infrastructure is not flexible enough to meet business needs
2. Users of IT services have to wait too long to get access to additional computing resources
3. CFOs and CIOs are tightening budgets, and they prefer operational expenses (tied directly to business performance) vs. capital expenses (allocated to business units)

In every case, the public cloud option outperforms the private cloud. Let’s examine each point:

1. Flexibility – the ability to access essentially unlimited computing resources as you need them provides the ultimate level of flexibility. The scale of a public cloud like Amazon’s EC2 cannot possibly be replicated by a single enterprise. And that’s just one cloud – there are many others, allowing you to choose a range of providers according to your needs.
2. Timeframes – to gain immediate access to public cloud compute resources, you only need an active account (and of course the appropriate corporate credentials). With a private cloud, users have to wait until the IT department completes the build out of the private cloud infrastructure. They are essentially subject to the same procurement and deployment challenges that had them looking at the public cloud in the first place.
3. Budgets – everyone knows that the economic environment has brought a new level of scrutiny on expenses. In particular, capital budgets have been slashed. Approving millions of dollars (at least) to acquire, maintain and scale a private cloud sufficient for enterprise needs is becoming harder and harder to justify — especially when the "pay as you go" approach of public clouds is much more cost-effective.

There are many legitimate concerns that people have with the public cloud, including security, application migration and vendor lock-in. It is for these reasons and more that we created CloudSwitch. We’ve eliminated these previous barriers, so enterprises can take immediate advantage of the elasticity and economies of scale available in multi-tenant public clouds. Our technology is available now, and combines end-to-end security with point-and-click simplicity to revolutionize the way organizations deploy and manage their applications in public clouds.

Sir Isaac Newton may not have dreamed about clouds, but his first Law of Motion, "a body at rest tends to stay at rest", has been a good harbinger of cloud adoption until now. It is fair to expect that people will grasp for private clouds simply because it’s more comfortable (it’s the status quo). However, the rationale for public cloud adoption is so compelling that a majority of organizations will choose to embrace the likes of Amazon, Terremark, and other clouds. As adoption increases, private clouds will be used only for select applications, thus requiring far fewer resources than they currently demand. We’re also seeing the emergence of “hybrid” clouds that allow customers to toggle compute workloads between private and public clouds on an as-needed basis.

In the end, we will have new wine and it will be in a new bottle. With CloudSwitch technology, 2010 is shaping up to be a great vintage.