A history of the cloud and an outlook to edge computing (part 2; deep-dive)
Tags: Cloud Computing, Future Technology, Cloud, History Of Technology, Edge Computing

Pre-2000s — the adoption of PCs and early internet

In summary (internet 1.0)

The internet use-case of the early 90s was seen as web 1.0. Websites were seen as 1-way stream of information from content creators to a static HTML web page. As web-pages across the internet were now accessible (due to TCP/IP and enabled by internet browsers), users could access web pages as they wished. A problem was that although the internet was filled with information/content, there needed to be some sort of way to filter the internet to find what one is searching for. Google was one of the early companies which understood this problem and effectively solved it by scraping and indexing all pages of the internet and then ranking which pages have the best match with a certain “search” phrase, largely based on the text on a web site. As user-friendly tools emerged for web-search and communication (AOL, MSN, e-mail), internet adoption rapidly grew with the overall adoption of PCs.

A. Growth in CPU processing power and storage

The original method of calculation was by hand or with human “computers” which would add up mathematical equations. This cumbersome task was replaced when we found that mainframe “computers” could carry out many of these computations for us. These mainframe computers became increasingly advanced, however, they remained large, clunky, and took up significant space in rooms. Even when mainframe servers improved, the advances in virtualisation were not there yet, which meant that 1 application could run on 1 server at a time — this meant that the server was running idle for a large portion of its time, making it highly expensive to have a mainframe server.

Source: Computerhistory.org

Computers in the 70/80s were expensive and could only be funded by large organisations or well-funded universities. One of the main reasons which led to such a high cost profile was that there was a low ROI on mainframe computers due to the high percentage of time it was idle and not being used. Compute costs were high as the early mainframes were not designed to be used by multiple users. Soon advances in a “time-share” system allowed a mainframe’s resources to be evenly split so that multiple users could use the computer’s resources in parallel. This already improved the utilisation of mainframe’s, however, the biggest improvement came in 1972 when IBM introduced its first virtual machine (VM), allowing them to virtualise all operations and share the mainframe’s resources flexibly depending on the requests of users. This meant that each user had a “virtual environment” where they could run their applications, independent of other users, which dramatically increased the ROI of mainframe’s as the utilisation improved. Cost of computing therefore decreased, opening the use-case to a greater number of organisations and universities.

Source: Macquarie Cloud Services

B. Decreased cost of chips leads to increased household PC penetration

The processing power of microchips increased significantly from the 80s onwards and throughout the 90s, which decreased the cost of computing power, making it possible to bring CPU processing to the masses via the personal computer (PC). The decreased costs of PCs led to a growth of homeowners buying PCs as well as business users adopting PCs and software that runs on the PCs (i.e. Microsoft Office). In 1990, the percentage of US households that had a computer was 15%, which grew to 70% by 2010. With a growing PC user base, the ROI on developing software became higher as the market of potential buyers was growing exponentially.

Percentage of US households with a personal computer

Source: Statista

C. Adoption of PCs and dot-com boom leads to new internet use-cases / business models

PCs were effective for running simple applications such as Microsoft Office (i.e. Word, Excel, Powerpoint), games, communication tools as well as web browsing. The interaction with the internet was primarily one-way wherein websites had information that PC users would read. There was limited 2-way interaction in the sense that PC users were not uploading documents (i.e. images, files, videos) to the internet as the bandwidth was too slow. This age can be seen as being (relatively) good in CPU power, but limited by slow dial-up internet speeds. The “killer apps” were messaging (AOL, MSN), Microsoft Word/Powerpoint/Excel and basic browsing to find information online.

Source: The Verge

D. Network is improved to cater to new software use-cases

The Merriam-Webster definition of network is “an interconnected or interrelated chain, group, or system”. In today’s world it is an interconnected group of computers, linked by cables which, transmit electric signals. However, pre-computer days we had physical networks — enabled by railroads. In the early 1900s the United States embarked on a quest to link the east and west-coast to improve communications and to more effectively transport goods. Underneath the railroad tracks were simple cables, which were used to transmit signals from railway station to the next railway station (i.e. train has left, arriving soon, etc). Soon railway owners learned that the ability to send signals through the cables alongside the railroad tracks had commercial value — which they soon started selling to corporates. Many railway owners found it a highly profitable business to sell the capacity of their cables (which were laying alongside/underneath the railroad tracks). Railway owners invested in better cables, charged higher prices, and the rest is history as many switched towards becoming telecom businesses. SPRINT is a leading telecom company in the United States today, however it was originally a railway company called Southern Pacific Railroad. The map below shows that the cables alongside railway tracks kept getting improved and slowly started forming the backbone of the US cable networks. The image below shows a nearly 1-to-1 match of todays cable networks with the original railroads, which made sense due to the land that was already leveled and cleared.

Source: ParabolicArc

Despite an increase in computing capacity, networks were still limited by their overall reach and protocol standards. The standardization of network protocols (TCP/IP) was one of the most important steps in the overall development of the internet as we know it today. The origin of the internet comes from ARPANET, which was initially an initiative from the US Department of Defense to distribute information in the event of an attack on a central node (information broker) in the network. The idea to spread information was further developed and led to universities establishing an early network as depicted below.

Source: Wiki History of Internet

Over the years, ARPANET grew with more nodes and endpoints being connected over the network. Furthermore, multiple networks started being formed, which raised the question as to how they would all communicate with each other.

Source: Wikipedia

With the implementation of TCP/IP protocol, a standard protocol was developed for communication across multiple networks. This meant that a single network-of-networks was formed — which became to be known as the internet. Although the network could now communicate effectively with each other, this was still not the internet as we know it today as there was no browsable web. In 1989 a British researcher at CERN developed a way to link a hypertext document to an information system, which any member (node) of the network could have access to. This was the origin of the world-wide-web as we know it today, allowing us to navigate to websites.

2001–2010s — the adoption of PCs and smartphones

Improvements in network speeds change user online behaviour

As the number of users on the internet increased significantly, the (increasing) network value of the internet became obvious. Social media platforms popped up and rose quickly in popularity. Social media platforms were only made possible when the quality of the network improved so that it was now also possible for user-generated content and for richer media to be uploaded/downloaded by users. Users uploading pictures and having songs on their “page” was a highly popular feature — enabled by improvements in the network. The internet changed from a 1-way flow of content from companies to users (read-only information) to a 2-way flow where internet users were also contributing content (i.e. posts, pictures, videos). As the internet network rolled out and improved to 3G and then to 4G, increasingly rich content could be streamed and sent with low latency across the internet to enable use-cases such as YouTube and ultimately Netflix.

In 2001, with 3G networks, peak data transfer speed was ~2MB per seconds. By 2010, with the roll-out of 4G networks the network speed increased by 50x to 100MB per second at peak speeds.

Source: CTIA

Nielsen’s law predicts consistent growth in network bandwidth

Nielsen’s law of internet bandwidth states that a high-end user’s connection speed grows by 50% per year — which has held true from 1984 to 2019. The rate of internet speed development grows c. 10% lower than Moore’s law, which grows at c. 60% per year. The chart below shows a log scale of how many bits per second can be transferred across the internet.

Source: NNGroup

Low-latency network enables cloud-based servers

Due to the exponential rise of internet users (desktop and mobile), more companies shifted their business models to cater to online users. The processing power (CPU) for running the website and the company’s software came largely from on-premise servers, which each company managed themselves. In practical terms, this meant organisations typically had a large server room in the basement, where they would have all of the servers running. A key problem for companies was that managing their own servers was not their core-business and it was expensive as the servers were not being used to their full utilisation. Sometimes utilisation of servers was as low as 15% (source: Macquarie Cloud Service). Companies started looking for ways to outsource the management of their servers to others (i.e. datacenters), which ultimately led to centralised cloud service providers. By outsourcing server (CPU) to a 3rd party, a company does not need to invest upfront to buy servers. A company can now rent CPU processing power on a pay-as-you-go basis from cloud providers. For cloud providers, this model is also attractive due to the advances in virtualisation as they can offer multiple companies a piece of the same server — significantly improving the utilisation of each server. Hosting software and websites on 3rd party servers was only possible due to the significant improvements in network infrastructure, which meant that companies could trust that 3rd party cloud was reliable, safe, and had low latency (time required to send from server to end-user).

Source: SpiceWorks

Smartphones exponentially increase the number of internet users

As microchips continued getting smaller and being able to handle greater workloads, we reached a point where they were small enough to fit into a phone-device that could fit into a pocket. In 2007, with the launch of Apple’s iPhone, we would enter a new age based on capability and internet reach at our fingertips. From 1990 to 2007, the percentage of households with a computer grew from 15% to 70%. Few predicted that the adaptation of smartphones would grow at an even faster pace. Global adoption of smartphones grew +11x from 124 million in 2007 to 1.4 billion by 2015.

Source: Gartner, IDC, Apple

Cloud-based (high powered) servers enable new business models