IBM has already established cloud computing centers in the Chinese cities of Dongying and Wuxi. In the former, the cloud will serve as a "smarter city" platform for development of services. In Wuxi, it will serve as a collective platform for software development. Now it's on to Ho Chi Minh City.IBM has been selected by the software company, Quang Trung Software City, to build a cloud platform on which to base a "Smarter Government" in Ho Chi Minh City. That's the former capital of South Vietnam, Saigon, and still the largest city in Vietnam, with nine million people. IBM is clearly testing its ideas on how to proceed with the cloud model on large and eager Asian customers. IBM will work with the city government to consolidate email systems and Web sites to a Quang Trung data center to promote more electronic government services.

IBM will work with the Ho Chi Minh People's Committee to establish a more citizen-centric government. It will seek ways to encourage collaboration and information sharing across agencies and government borders. It will seek information sharing forums on problems in the community. More government data and information will be made available through the shared resources of the cloud.

IBM didn't specify what hardware it would use to build the Ho Chi Minh City cloud, but in the Yellow River Delta Cloud Computing Center in Dongying, it used its HS22 blade appliance announced in June and built with Intel's Xeon 5500 processors, formerly known as Nehalem chips, with eight cores. Last year IBM built a cloud computing center in Vietnam with facilities in both Hanoi and Ho Chi Minh City.

With 200 researchers dedicated to the cloud computing model and a $100 million investment, IBM continues to stage its largest, publicly announced cloud implementations in Asia. It clearly wishes to be competitive there and appears to be doing so.

Does that mean it doesn't have enough cloud know-how to compete with Amazon Web Services EC2, Google AppEngine, Rackspace and Microsoft's Azure at this point in North America? I think the answer is that it is tinkering with the economies of scale represented by the cloud data centers. Those economies may be challenging to a company that has always positioned itself as offering the high end of computing. The Amazon, Microsoft and Google data centers appear to be the largest ever built and at the same time they're designed to run at a low cost per server. Perhaps IBM is about to unveil some new version of x86-based data center that matches their designs. But I'm not sure of that. In reflecting on the inadequacy of "cloud" as a name, IBM CEO Sam Palmisano suggested referring to cloud computing as "highly virtualized infrastructure."

That it is, but it is also built to realize extreme economies of scale, resulting in low hourly charge rates. "Highly virtualized infrastructure" by itself doesn't achieve the 12 and 12.5 cent hourly rates for a Windows Server offered by Amazon and Microsoft, respectively.

Low cost energy, highly automated operations, ease of server replacement and route-around-failures governing software all play a part. And I'm curious whether IBM will bring its own solutions to these issues to market here or continue tinkering just out of sight.