The author uses a power generation metaphor to indicate that as increasingly reliable networks make the physical location of computers less important. Services traditionally provided by internal IT departments can be acquired externally from service providers. This shift, as the author points out, reveals a common pattern: Standardization and technology advances permit specialization by individual firms resulting in economies of scale and higher service levels. 

Microsoft senior VP of research Rick Rashid remarked that 20% of all servers are being bought by a handful of large Internet companies, including Amazon, Google, Microsoft, and Yahoo. It's evidence that, behind all the talk about cloud computing, there are huge investments in server infrastructure.

Sun's CTO Greg Papadopoulos a couple years ago came up with a similar "red shift" theory, in which a few companies account for a disproportionate amount of IT infrastructure and consumption. An elite group of companies are acquiring inordinate amounts of IT infrastructure, well beyond most other businesses, and their demand is growing exponentially."

According to Papadopoulos, the red shift phenomenon threatened to exceed the ability of Moore's Law to keep up. Cloud is the answer.

Microsoft and Google are building new data centers. The tens of thousands of servers going into these new and existing data centers underlie the Web traffic and content of not just the companies running them, but millions of consumers and thousands of business customers. Increasingly, through virtualization and multi-tenant architectures, they're being used in support of cloud offerings such as Amazon Web Services, Google Apps Engine, and Microsoft's Azure services.

Amazon Web Services has established itself as a leader in the cloud computing market, and Microsoft has been playing catch-up. However, as Microsoft's Azure cloud strategy falls into place, it's sounding more like these would-be partners are on a collision path.

As the cloud computing becomes more promising, I agree that how cloud services should interact with existing IT and organizational systems will be the subject of managiement.