Unless you have been living in a fog, you could not have escaped hearing about Cloud Computing. At the risk of spoiling the surprise, Reed Smith created this Cloud Computing initiative, based on our observations and growing belief that Cloud Computing is and will continue to fundamentally alter the business, economics and operations of companies around the world. Cloud Computing is not a technological phenomenon any more than Social Media is a technical innovation. Cloud Computing, like Social Media, is driven and enabled by technology, but represents a fundamental significant shift in the manner in which technology will be used by everyone in the years and decades ahead. The result will be shifting and unique legal and regulatory challenges. We will see fundamentally different business, economic and operational relationships between providers and business enterprise, between business enterprise and customers, between suppliers and business enterprise and customers, and even internally within each business enterprise itself. In the months that follow, we aim to dig well below the surface of many of the legal, regulatory and contractual implications presented by Cloud Computing.

So what do we mean by “Cloud Computing”? One of the simplest definitions I’ve seen, comes from a 2010 Yankee Group report, that defines “cloud computing” as “dynamically scalable virtualized information services delivered on demand over the Internet.” Unless you are extraordinarily conversant with the technology, that definition might leave you a bit numb. So let me give you a few analogies that might be helpful.

You buy a toaster and plug it into the wall socket. The utility company hasn’t a clue you bought it, nor do they know if it’s a small one or a commercial grade toaster. You didn’t use it today, but tomorrow you will. You also have an air conditioner that’s on a thermostat – it cycles on and off depending on the temperature. You might live in a single-family home or an apartment house with more than 100 units. The electricity demands may vary greatly by unit or even by individual, and within a few miles or a few thousand miles, the ebb and flow of demand for electricity is locally unpredictable and dynamically variable. But through years of capacity planning and statistical modeling, with interlocking and interconnected networks among the various utility companies, electricity is there, with rare exception, when and where you need it. Seamlessly, dynamically responding with as much or as little as you need, on demand.

You buy a sophisticated set top/game console for your entertainment center. You can watch television programming, rent movies on demand, play games locally or even across the Internet. It doesn’t hold any content. The content arrives, on demand, through signals sent to an array of virtual servers and processors, from a diverse set of program platforms, publishers and providers. In fact, you are so tech savvy, you even have a locally secure and encrypted Wi-Fi network in your home so you can stream the music, video, gaming and programming content anywhere you put a device capable of receiving the signal, and displaying or playing the content in response to the command of your remote control.

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