This is an idea I've been interested in for a while. The real benefits will occur when the equivalent of derivatives become common.
The clearest example is mapping a RAID server (multiple disk drives, with some technique for splitting up the data to achieve high reliability) into a contract backed by multiple cloud computing providers. A 3rd party company could sell high reliability contracts by buying up cheap low reliability contracts and applying a RAID technique.
Cloud providers and hardware companies could also look at the price curve of different types of performance/reliability contractts in long term options contracts (eg. 1 hour of 1Ghz processor delivered 18 months from today) to plan for future demand.
It's a bit dated now, but I once took a stab at writing this up when I was trying to pick a startup idea. Amazon S3 came out shortly after this was written and changed the assumptions considerably: http://bit.ly/dWIpqC
One other point should be made, though: creating an on demand market for network bandwidth was Enron's last spectacular flame out. They were trying to bring their expertise for trading electricity (which had caused serious problems in California) to the new big thing of the time: the internet.
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This is an idea I've been interested in for a while. The real benefits will occur when the equivalent of derivatives become common.
The clearest example is mapping a RAID server (multiple disk drives, with some technique for splitting up the data to achieve high reliability) into a contract backed by multiple cloud computing providers. A 3rd party company could sell high reliability contracts by buying up cheap low reliability contracts and applying a RAID technique.
Cloud providers and hardware companies could also look at the price curve of different types of performance/reliability contractts in long term options contracts (eg. 1 hour of 1Ghz processor delivered 18 months from today) to plan for future demand.
It's a bit dated now, but I once took a stab at writing this up when I was trying to pick a startup idea. Amazon S3 came out shortly after this was written and changed the assumptions considerably: http://bit.ly/dWIpqC
One other point should be made, though: creating an on demand market for network bandwidth was Enron's last spectacular flame out. They were trying to bring their expertise for trading electricity (which had caused serious problems in California) to the new big thing of the time: the internet.