A few days ago, commenting on one of my posts, a reader inquired about my health, in particular whether or not I was behaving myself. While on the one hand I found it mildly amusing, as it felt like my mom was asking the question — which she does every Sunday — his comment also made me realize how much our little community cares about my well-being.

I’ve been meaning to write about my progress, but I’ve shied away from it because it always felt like I would be imposing on people’s time. And I’m still not ready to share it all.

But in the meantime, I can show off my new icon/avatar for the site. Gone is the old hat-wearing, cigar-chomping, newshound look. Instead, what you have is a simpler, more understated icon whose sparseness reflects my new mantra — less is really more. And doing more with less is really hard. Let’s call this version of me Om 2.0.

Simple food, simple clothes, a simple home and simple, clear writing. Hopefully I can stick to that plan. I have incorporated physical exercise into my daily life, given up smoking, gone almost completely vegetarian and taken to wearing jeans. Life, as they say, is uncomplicated. More importantly, about six months after my heart attack, I have resumed some of my regular activities — including playing tennis on the Wii!

PS: Check out this awesome little illustration Mivui did using the new icon. This is how I am supposed to look like in 10 years. Worthy goal - both from a fitness and a longevity standpoint. 

Earlier this month, I shared with you my post that called for a big wake-up call for Social Networking sector, thanks to the presence of too many me-too players at a time when recent traffic trends are showing signs of hitting a plateau. Hitwise recently reported that in the US, MySpace and Facebook ranked 1st and 2nd had 95% and 93% repeat visitors for the month.

The May 2008 traffic data from comScore furthers that argument. Another interesting finding of the May 2008 data – Facebook is doing much better than MySpace in the overseas markets.

Nevertheless, of late, I have stopped taking traffic on face value, and instead almost always juxtapose it to how much money you make off those page views. (Dave McClure recently chastised me for thinking too much in the short term.)

Matt Brezina, co-founder of Xobni earlier pointed out that Facebook will take in $265 million and MySpace will bring in $755 million in 2008. So unless the overseas (and overall page view) growth translate into real big dollars, our friends at Facebook (and MySpace) have problems. Experts believe that the answer is in better relevance in display advertising – still the dominant form of advertising on the social networks.

Facebook vs Others

The traffic trends have to be troubling for for geographic hits such as Orkut and Friendster. The overseas growth of Facebook also calls into question the veracity of the decision by AOL to pay $850 million for Bebo. Some data crunching by Andrew Chen (using the newly announced Google Trends) shows that Facebook is making big headway in markets such as UK, France, China, and India.  Orkut is very popular in India, while as the map shows Bebo is big in UK and other European countries.

I think it is these guys who need to worry the most with Facebook’s march & MySpace’s rear guard action. I suspect, if Facebook continues to grow, MySpace could opt for buying market share.

But if you take a larger view,  Chen’s conclusion, that “Social networks have weaker network effects than previously speculated,” is quite prescient. As someone once noted, social networks are like night clubs – there is always a cooler, hipper, funkier joint being planned by someone.

Over past few years, generally described as the golden years of social networking have led to the sector’s giants resting on their laurels. The fundamental nature (and utility) of social networks hasn’t really changed. The platform-ization of social networks has led to the rise of social apps that are best described as time wasters. You can be fascinated by vampire bites and what not but in the end, there is a finite amount of time you can waste.

In other words, Social Networks need to find new purposes for people to come back every day and be loyal. I had argued in my previous post that the world of social networks is going to be divided into two – the big players (MySpace, Facebook) and niche players (Dogster, Dopplr etc.)

In a recent chat, Ning CEO Gina Bianchini pointed out that they are adding 2000 new niche social networks every day and are now upto 315,000 networks. The niche is allowing the company to get even good non-optimized, straight-up average eCPMs from AdSense. She pointed out that they are about 3 to 4 times better than the average for general one-size-fits-all social networks. “This is because the social networks on Ning are organized around well-defined topics and interests – skiing, smart cars, diabetes, etc. As a result, contextual advertising works more effectively for Ning than it does for other general social networks,” she said.

Photo Courtesy of comScore via C/Net News.com’s The Social. 

The main value proposition of cloud computing is better economics, that it’s cheaper to rent hardware, software platforms and applications (via a per-usage or subscription model) than it is to buy, build and maintain them in the corporate data center. But if we expect that cloud computing is here to stay –- and not just a passing fad –- it must be feasible for the cloud providers themselves. So how do they do it?

They do it by leverage economies of scale. Put simply, the idea is that one very large organization can more efficiently build and operate its infrastructure than many small firms can on their own. To better understand this, let’s break down some of the financial advantages leveraged in cloud computing:

Specialization: Specialization is also known as division of labor, a term coined by the father of modern economics, Adam Smith. A company for whom running a large-scale data center is a core part of its business will do so much more cost-effectively than a company for whom it’s merely one aspect. The former will hire the best experts in the world, and will have the management attention required to continuously innovate, optimize and improve operations. And the overhead costs associated with doing so will spread thinly across massive usage. Case in point: Since it needed to use hundreds of thousands of servers, it was worthwhile for Google to build its own, homegrown devices to fit its exact power supply and fault-tolerance needs.

Although in software, anyone can build anything with enough people, time and money (as my old boss used to say, “It’s all ones and zeros”), it makes no sense for individual companies to develop capabilities such as dynamic provisioning, linear scalability and in-memory data partitioning when they’re readily available from off-the-shelf products.

Purchasing Power: Large organizations buy in bulk, which they can leverage to negotiate lower prices. So presumably the cloud provider can acquire lower-costing servers and networks, operating systems and virtualization software. Furthermore, they can negotiate better interest rates, insurance premiums and other contracts.

Utilization: This is perhaps the most important one and what I like to call the Kindergarten Principle, or “sharing is good.” In computing, tremendous savings can be achieved by having multiple companies share the same IT infrastructure.

Experts estimate average data center utilization rates range from 15 percent to 20 percent. If you include the processing, memory and storage capacity available on company-owned laptops and desktops as well, utilization rates may be as low as 5 percent. That’s a lot of waste. Imagine if this were the case in the hospitality industry. In most cases, a hotel with even 50 percent average occupancy rates would quickly go out of business.

So why is this happening with corporate IT?

Application loads are volatile; they experience peaks and troughs based on time of day, day of the week or month, seasons and so on. To avoid hitting the “scalability wall,” companies need to overprovision. So if a company expects a certain daily peak volume (for example, the opening of the trading day for an e-trading application), it will provision enough hardware so that utilization rates at the peak reach no more than 70 percent (leaving some room for unexpected loads – hey, Steve Jobs may announce the next iPhone today). But at other times utilization rates could go as low as 10 percent, with the average somewhere in between.

So the difference between peak loads and average loads drives overprovisioning and a high rate of unused computing capacity. But if we aggregate the activities of several companies, we will not face such volatility in application loads. Let’s see why.

Follow the Sun: In many cases, peaks and troughs in application volumes can largely be attributed to the time of day. Human-facing applications are active during daytime and face very low activity during the night. When New York experiences the opening bell trading spike, London is in the midday lull and Tokyo is going to bed. Same goes for e-commerce sites, social networking sites, gaming sites and others, though these types of applications might experience peaks after business hours as well.

If companies around the globe and in different industries share the same resources on the cloud, higher utilization rates will be achieved by the cloud provider, lowering its costs – savings that it can turn around and pass on to its customers. This model of shared resources even addresses the need to overprovision for unexpected peaks, as it is unlikely that all the cloud users, in all geographical regions and all industries will face peaks at the same time. This is similar to the notion of a bank not having all of the cash reserves necessary to handle the cash commitments to all customers at the same time (is there an equivalent to a bank run in cloud computing?).

Follow the Moon: And with so much focus on energy costs, data center power consumption and cooling (not to mention the environment), there’s also a cloud computing approach known as Follow the Moon. It posits that a cloud provider with physical data centers in several different geographical locations can run the applications that are active from the day side of the world in centers on the night side of the world, taking advantage of lower power and cooling costs.

Cloud computing, therefore, is an economically feasible strategy. Over time, the cost savings will be too compelling for all but the very largest companies to ignore.

Geva Perry is the chief marketing officer of GigaSpaces

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