What Happened in Cloud Computing in Q2?

gigaom_icon_cloud_computingAs this year’s Structure 09 made clear, the world of cloud computing continues to evolve at a feverish pace. But we know it can sometimes be hard to see the forest for the trees, which is why we’ve compiled some of the biggest news from the past three months. This recap is just part of the deep-dive analysis and trendspotting we’ve done in our just-published Q2 Infrastructure Wrapup on GigaOM Pro (subscription required), available alongside three others for the mobile, consumer and green IT markets.

Old Guard Does Cloud Dance

datacenterIf an IT trend is legitimate when the old guard — which makes plenty of money selling traditional solutions to risk-averse customers — fully embraces it, cloud computing established its legitimacy during the second quarter. Apart from the countless startups and software companies rolling out cloud products, the past quarter brought full-on infrastructure-as-a-service offerings from enterprise-grade service providers and systems integrators like Verizon (s vz) Business, Computer Sciences (s csc) and Unisys (s uis). They will not have the Fortune 1000 customer base to themselves, however, as cloud pacesetter Amazon Web Services continued its march forward with new capabilities, such as auto-scaling, and new products, such as Elastic MapReduce.

McKinsey Rattles Cloud Crowdcloudonomics

However, not all cloud news was good news. The quarter started with an April report by McKinsey & Co. that questioned the true cost savings of cloud computing, putting cloud providers and pundits on the defensive. The quarter wrapped up with highly publicized outages of Rackspace’s (s rax) Dallas data center and Google’s (s goog) App Engine platform. Meanwhile a routing error at Google slowed service for about 14 percent of users, and a lightning strike knocked out a small number of servers in Amazon’s (s amzn) EC2 cloud.

VMware Launches “Cloud OS”

We also saw the line between cloud computing and virtualization blur with the long-awaited introduction of VMware’s (s vmw) vSphere 4. Dubbed a cloud operating system, vSphere 4 combines VMware’s suite of dynamic virtualization tools under one roof and lets customers create private clouds from their own data centers. VMware has plenty of competition in the private cloud space, however, with everyone from IBM (s ibm) to Platform Computing to open-source startup Eucalyptus announcing products in the past few months.

Networking Giant Cisco Jumps In

Then there’s the continuing saga of Cisco’s (s csco) bold move into the server business. While Cisco spent the second quarter announcing new products and strategies based on its Unified Computing System vision, Cisco’s partners-turned-competitors began distancing themselves from the network leader. HP (s hpq) and IBM, the two most spurned vendors, each found networking partners that can help them lessen their reliance on Cisco, and that will not try to steal server sales from them in next-generation data centers.

Oracle and EMC Make Big Buys

But the biggest news of the quarter involved money –- lots of it. In a move that stunned the IT world, Oracle (s orcl) swooped in and bought Sun Microsystems (s java) — snatching it from under IBM’s nose — for $7.4 billion. The acquisition opened myriad possibilities, but few details will be known until it closes later this year. The same cannot be said, however, for EMC’s (s emc) $2.1 billion acquisition of Data Domain (s ddup). After winning a back-and-forth bidding war against NetApp (s ntap), EMC can incorporate Data Domain’s industry-leading data de-duplication technology into its portfolio and further extend its lead in the storage market.

The effects of the world’s economic recession also manifested themselves as public companies announced first-quarter results. Companies ranging from VMware to Cisco saw both earnings and revenue drop, in some cases plummet, and the overall chip market suffered a nearly 30 percent year-over-year sales decline. Indicative of the momentum of the software-as-a-service and cloud computing, however, Salesforce.com (s crm) actually posted a 23 percent revenue spike.

A more in-depth look at these trends and others is available in the latest Quarterly Wrap-ups in our four focus areas — Mobile, Green IT, Connected Consumer, and Infrastructure. These quarterly reviews are available to GigaOM Pro subscribers, along with dozens of detailed research briefings and in-depth articles on specific topics in each of these areas. You can subscribe here.