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as a service in a pay-per-use manner and over the Internet. In addition, we have
identified scalability and virtualization as key characteristics of Cloud Computing.
External data centres, e.g. those of Google or Amazon, are thus the foundation on
the raw hardware or fabric level for delivering IT capabilities as Cloud services.
However, virtualizing raw hardware resources and offering them as abstracted
IT capabilities as a service is not necessarily bound to the external delivery mode
usually associated with Cloud Computing. Companies and other organizations also
use virtualization and service-oriented computing to increase utilization of their
existing IT resources and to increase flexibility. The utilization rate of traditional
server environments is between 5 to 15% (e.g. IBM 2008). Increasing it to up to
18% is reported to be easily achievable (Lohr 2009, McKinsey 2009). Through
aggressive virtualization, large companies can increase their server utilization rates
to up to 35%, which is close to the level of Cloud providers such as Google with
38% (Lohr 2009, McKinsey 2009). Higher utilization makes possible to consoli-
date server environments, i.e. the number of physical servers can be reduced. This
lowers hardware maintenance costs, required physical space for the servers, power
and cooling costs as well as the carbon footprint of IT.
To distinguish between external providers of Cloud services (external Clouds)
and companies' efforts to build internal Cloud infrastructures (internal Clouds) two
distinct terms are commonly used: Public Cloud for external Clouds and Private
Cloud for internal Clouds (see e.g. Armbrust et al. 2009, IBM 2009, Reese 2009,
Sun 2009a).
A Public Cloud is data centre hardware and software run by third parties, e.g.
Google and Amazon, which expose their services to companies and consumers via
the Internet (Armbrust et al. 2009, IBM 2009, Sun 2009a). A Public Cloud is not
restricted to a limited user base: it “…is made available in a pay-as-you-go manner
to the general public” (Armbrust et al. 2009). Thus, Clouds can address two type
of customers: either end consumers on the B2C market or companies on the B2B
market.
Companies may not be willing to bear the risks associated with a move towards
a Public Cloud and may therefore build internal Clouds in order to benefit from
Cloud Computing. Private Clouds refer to such internal data centres of a company
or other organization (Armbrust et al. 2009). A Private Cloud is fully owned by a
single company who has total control over the applications run on the infrastructure,
the place where they run, and the people or organizations using it - simply over
every aspect of the infrastructure (Sun 2009a, Reese 2009). A Private Cloud relies
on virtualization of an organization's existing infrastructure (Reese 2009), leading
to benefits such as increased utilization as described above. The key advantage of a
Private Cloud is to gain all advantages of virtualization, while retaining full control
over the infrastructure (Reese 2009).
The definitions of Cloud Computing reviewed in section 4.2 clearly show that
Cloud Computing concerns the delivery of IT capabilities to external customers, or,
from the perspective of the user, obtaining IT capabilities from external providers.
Thus, some authors do not consider Private Clouds, or internal Clouds, as part of or
as true Cloud Computing (e.g. Armbrust et al. 2009, Reese 2009). Reese (2009), for
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