Cloud computing isn't another name for "utility computing" or just a buzzword that will be replaced by another term. "The cloud is the next evolution of the Internet," declared Russ Daniels, Hewlett-Packard's CTO for cloud computing and VP of cloud strategy.

Part of Daniels' responsibility is explaining to customers how they should think about their future and cloud computing.

"Every enterprise customer who comes to HP expects to have a conversation about the cloud," he noted at a breakfast meeting for the press in San Francisco. Daniels described how HP views where cloud computing is headed.

"Effectively, the world is cleaving in two," he explained. There's the traditional world of the enterprise data center, which will continue to exist, and there is a new external supply of compute power and services accessible over the Internet. The data center is almost always on the company's premises and contains servers and networks dedicated to particular applications and tasks. The cloud is off-premises, and its resources are primarily shared across many customers' tasks and can be expanded upon demand to meet traffic increases.

"Virtually every enterprise will operate in hybrid mode," with some of its operations on-premises and some in the cloud, he predicted. Contrary to some theories put forth, he said cloud computing is not a replacement for the data center. "The idea that we're going to one day throw a switch and move everything out to one of a small number of external data centers, located next to a low-cost power source, is nonsensical. It's not going to happen. Cloud computing is not the end of IT," he said.

Daniels said he attended a recent conference where Marissa Mayer, Google's VP of search products and user experience, and Amazon.com CTO Werner Vogels were asked if they believed that in the future, there would be three cloud-based data centers: Amazon's, Google's, and Microsoft's. "They said yeah, we think that's the way the world is going to go," Daniels said.

But HP takes this stand: "That's a radical oversimplification. The cloud doesn't displace the business data center. HP thinks there will be a balance of the two." Other data center forms, including small, mobile ones, will undercut the once-assumed advantages of big new data centers at cheap power sources.

Daniels pointed out that present cloud models call for virtualized files to be imported in a prearranged format and run on computer resources prepared to receive them. But the cloud's economy of scale trails off at a certain point, if the workloads themselves haven't been rearchitected for cloud computing, not merely virtualized and moved off the enterprise's premises.

"If you use virtualization [internally], you will gain a significant reduction in cost. If you move the workload to the cloud, you have to redesign the software architecture of the workload" to realize another "order of magnitude" cost savings, he said.

Daniels used the example of Salesforce.com, which created sales force automation as an online service for medium and small businesses that didn't have the IT infrastructure to implement Siebel Systems sales force automation.

"Salesforce couldn't just host Siebel's application. It wasn't designed for multitenancy. It wasn't designed for variable demand," he said.

By creating a new multitenant application, hosted in a large data center, Salesforce brought cloud computing to a specific business application for small and medium business. Because multiple customers could use the same application, and flow their data through the same database server without intermingling, Salesforce could charge $40 a seat for its application, instead of $400 or $4,000.