A primer on cloud computing and virtualization

Two of the hottest terms in computing these days are virtualization and cloud computing. Are these two terms the same? Are they mutually exclusive? Does one depend on the other?

This article will demystify the terms and help the reader understand how each technology fits today's organizations.


The term "cloud computing" comes from the symbol usually used to depict the Internet on network diagrams. That term leads one to believe that some portion of their computing environment "lives" on the Internet - and that assumption would be true. This type of computing environment is quite a departure from most computing environments today, where all computing resources are owned or operated within an organization's LAN/WAN infrastructure.

So, cloud computing is some type of service. Cloud computing can be a service for a single piece of software (like Google Docs), a single component for software (like Microsoft SQL Data Services), virtual servers (like Amazon EC2), etc. The main advantage to cloud computing is that the service provider takes care of all the capital expenditure and a percentage of the operational expenditure, depending on the type of service.

For example, Google Docs takes care of 100 percent of the capital expenditure and 100 percent of operating expenditure, whereas Amazon EC2 takes care of 100 percent of capex, but maybe 25 percent of opex.


Virtualization is another hot topic today. A lot of people think virtualization means server virtualization, but the truth is that virtualization is a very broad topic. There are many types of virtualization, including server virtualization, application virtualization, desktop virtualization, operating system virtualization, presentation virtualization, etc. But for the purposes of this article, we will focus on server virtualization.

A virtual server is basically the same as a physical server based on outward appearances. Virtual servers perform the same functions as physical servers. In fact, it is nearly impossible to distinguish a physical server from a virtual server when logged on to the server console (unless you start to go look at drivers). The key difference between physical servers and virtual servers is that virtual servers are not installed on the physical hardware (they are hardware-agnostic). Virtual servers are installed on something called a hypervisor. This hypervisor allows you to run many virtual servers on a single piece of physical hardware.

Are they related?

Technically, cloud computing doesn't require virtualization. But in order for cloud computing to be a practical service offering, you need the economies of scale and automation capabilities of virtualization. Otherwise, the cloud service provider would need to manually provision services per client with dedicated hardware.

Nicholas Carr draws a nice analogy in his book Does IT Matter? Up until the last decade of the 19th century, most manufacturers relied on water or steam power to operate their machinery. These power systems were large, complex and expensive. Around the turn of the century, the construction of central power stations in cities brought the operating benefits of electric power to small manufacturers. These small manufacturers couldn't afford to build their own infrastructure, but they could afford to purchase power in small quantities from a utility. Eventually, all manufacturers converted to using power from utility companies. Electric power became a commodity instead of a competitive advantage.

Jason Conger is the hosted services architect at Xcentric, which specializes in IT solutions and certified networks for CPA firms. Reach him at (678) 297-0066 or jconger xcentric.com.

(c) 2009 Accounting Today and SourceMedia, Inc. All Rights Reserved.

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