1. Envisioning the Cloud: The Next Computing Paradigm and its Implications for Technology Policy Google DC Talks The Newseum 555 Pennsylvania Avenue Washington, DC Jeffrey F. Rayport & Andrew Heyward Marketspace LLC A Monitor Group Company March 20, 2009 2009 marketspaceLLC, A a monitor group company CONFIDENTIAL: NOT FOR DISTRIBUTION 2008 Marketspace LLC, Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTION

2. Overview Understanding the Cloud Benefits of the Cloud Enabling the Cloud Government and the Cloud Concluding ThoughtsEvery dozen or so years, a revolution changes the way we use computers. Huge mainframes in the 1960s, minicomputers in the 1970s, personal computers in the 1980s, cell phones and smartphones in the last decade, and now the emergence of cloud computing. 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTION www.marketspaceglobal.com 2 3. Seeding the CloudProcessing Power Storage Connection Speed Gordon E. Moore Mark Kryder Andy Grove 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTION www.marketspaceglobal.com 3 4. Defining the Cloud Cloud computing represents a new way to deploy computing technology to give users the ability to access, work on, share, and store information using the Internet. The cloud itself is a network of data centers each composed of many thousands of computers working together that can perform the functions of software on a personal or business computer by providing users access to powerful applications, platforms, and services delivered over the Internet.Online MusicSocial Networks Photo Sharing Online VideoSmartphones Web-mail 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTION www.marketspaceglobal.com 4 5. Layers of the Cloud 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTION www.marketspaceglobal.com 5 6. Benefits of the Cloud AnytimeAnywhere Founded in 1999 declaring the end of software Access Offered cloud-based version of CRM software Became first cloud-based service to generate $1 billion in sales Specialization &Customization Sells on demand contract and proposal management systems Built a prototype in a couple of weekends using SalesforcesForce.com platform company profitable within nine months Focused on customer needs, not development or infrastructure 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTIONwww.marketspaceglobal.com 6 7. Benefits of the CloudCollaboration Held InnovationJam in 2006; worlds largest online brainstorm,designed to share IBMs advanced research and technologies Included over 150,000 participants from 104 countries From concepts developed during sessions, IBM launched 10 newbusinesses with investments totaling $100 millionStorage asUniversal Digitized 150 years of archives, which comprised 11 million articles Servicerepresenting 1.5 terabytes of memory Utilized Amazons Simple Storage Service (S3) to digitize completearchival content page by page in under 36 hours 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTIONwww.marketspaceglobal.com 7 8. Benefits of the CloudProcessing Provides web-based software for creating presentations using Power on photos and music uploaded to the web Demand Increased traffic to 750,000 from 5,000 a day after a successfulFacebook marketing campaign Added capacity on Amazon Web Services infrastructure at a cost of10 cents per server hour plus related expensesCost Savings Utilized Google Apps to provide Office-type productivity softwarefor its workforce of over 16,000 people Achieved estimated savings of $80 million by not building its owndata center or hiring more engineers to manage it 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTIONwww.marketspaceglobal.com 8 9. Enabling the Cloud Universal ConnectivityOpen AccessThe point is that no one should There will be 499 million in-homebe denied access to [online consumer broadband connectionsresources] because of who they worldwide by 2012 anare. So this is a fairness issue extraordinary number, but itmore than anything else. represents only 25% of the worlds households. - Vint Cerf, Chief Internet - Gartner Group Evangelist, Google In 2007, the United States ranked15th in the This raises complex issues that emerged in world in broadband penetration and 13th inthe debate over net neutrality, and overall Internet connectivity powerful commercial interests are at stake If the United States falls short in universal Any barriers that restrict access to the access, cloud benefits will fall short, too Internet limit the potential of the cloud 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTION www.marketspaceglobal.com 9 10. Enabling the Cloud Reliability Interoperability and User Choice It is not just about being always If a customer doesnt like our on; it is this idea of reliability. If service, they can cancel. this is reliable, thats a big thing. If it isnt, then what do we turn to?- Polly Sumner, President,Platform, Alliances, and Services,- Kevin Kelly, Founder, Executive Salesforce.comEditor, Wired Magazine Even best-known providers of cloud As of now the major players operate services fail from time to time stiffeningproprietary cloud infrastructures, with resistance of IT departmentsvarying degrees of open standards Service that comes close to 100 percent If large providers move to dominate with reliability is a prerequisite for widespreadproprietary clouds, it will be difficult to adoption of cloud computing realize the full potential of cloud computing 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTIONwww.marketspaceglobal.com 10 11. Enabling the Cloud SecurityPrivacy If we give this data to a cloud computing company, and there is The best medicine is a security breach or if that accountability and transparency. company gets sold, how do we address that? I am accountable. - Dan Burton, Senior Vice President of Global Public - Carolyn Lawson, Chief Policy, Salesforce.com Information Officer, California Public Utilities Commission Notion of making a third party responsible In the United States, the law treats personal for keeping data safe continues to provokeinformation differently once its handed debates in corporate IT departments over to a third party Cloud providers must demonstrate that Cloud providers must protect user data data is safer than in current systems from unauthorized government access and ensure integrity of commercial use 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTIONwww.marketspaceglobal.com 11 12. Enabling the CloudEconomic ValueSustainabilityThe classic challenge ofaddressing a new market is to doit at a lower cost, make things In 2006, data centers consumedavailable where they could not 1.5% of all electricity used in thepreviously be delivered, or United States.remove complexity. The cloudcan address all three of those. - Environmental Protection Agency - Russ Daniels, VP and CTO of Cloud Services Strategy, HP The cloud is creating new business EPA estimates that by 2011, consolidating opportunities and new markets by offering computing into data centers could reduce high-end computing at lower costcarbon dioxide emissions by 47M metric tons The real test will be for the cloud to reduce As enterprises come under increasing costs, increase productivity, and enablepressure to go green, sustainability is faster innovation at the enterprise level critical to the viability of cloud computing 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTION www.marketspaceglobal.com 12 13. Government and the CloudWho Decides? Policy MarketCybercrime EnforcementInstitutional AdoptionUniversal Connectivity SustainabilityPrivacy SecurityInteroperabilityReliabilityEconomic Value 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTION www.marketspaceglobal.com 13 14. Cloud EcosystemData CentersMedia CompaniesISPs Device Manufacturers 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTION www.marketspaceglobal.com 14 15. Living with the CloudNetbooks Retail Touchpoints Set-top BoxesMedical Devices Music PlayersElectronic Readers Home AutomationTransportation VehiclesConsumer AppliancesVideo GameSystems 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTION www.marketspaceglobal.com 15 16. The cloud is a reality for consumers and will become the new normal in corporations and organizations The cloud is one avenue for the United States to re-asserteconomic and technology leadership on a global stageWhat government can do best is clear the road for the clouds expansion, not pave it 2009 Marketspace LLC, A Monitor Group Company CONFIDENTIAL NOT FOR DISTRIBUTIONwww.marketspaceglobal.com 16