re: When To Pick Up Cloud As A Tool
But companies are not buying cherry pickers (highly specialized workloads) from IBM SmartCloud, Azure, AWS. They are buying hammers (commoditized platform workloads), such as vanilla MS Server instances or vanilla RHEL instances. UR has scale advantages, but people use UR not due to pure scale advantages. They use them, as you mention, for rare needs. Utilities, like cloud services, sell a commodity service with a pure scale advantage.
"But if you sell by the byte and by the cycle, either you keep dropping prices, or you invite customers to figure out when they can run the same resources more cheaply themselves."
I don't know why this would be a problem for the "cloud" services industry, unless there is price fixing going on between the cloud providers. If someone is making a huge margin by not passing on Moore's Law savings to customers, another company will undercut them. I don't know why the market rules would not apply. If IBM or HP do not lower their server prices in line with advances, the other will start to gain share with lower prices. I don't know why this would be different for IBM and HP in the cloud market.
The benefits of the utility, or cooperative, model are not negated by regulation. Controlled monopolies allow utilities to build up scale that they would not be able to have in a completely open market, but the level of scale is the only thing that would change in an open market system. Without regulation, power cooperatives still would have the benefit of scale beyond what most individual businesses could achieve on their own, buying power beyond what individual businesses could achieve on their own, automation of processes through investment in tools which are ROI justified by scale, etc.
"Once you end up in a market subject to supply and demand, someone's demand could dry up your supply, and that's not something IT shops or CEOs are ready for."
CIOs are already in this world. Look at memory prices and scarcity over the last five years, sky rocketing due to demand for virtualized workloads. I don't know why the world changes when these servers are in a larger cloud provider data center instead of a smaller data center. If demand goes to the moon, e.g. large company x decides to buy 10,000 of a particular server, other companies are going to wait or pay more for those servers. The same would be true if company x buys the equivalent of 10,000 servers from a cloud provider. The others will have to wait until capacity is added or the prices will go up.