If companies are starting to use the Internet for data processing, is security a huge problem?

I don't think it's a huge problem. The onus is on the suppliers to prove their reliability and security and earn the trust of the buyers, but my own feeling is that ultimately the utility model will offer greater security than we have today, because today our IT system is incredibly fragmented. Some companies and some individuals are very attuned to security and are very good at it, and others aren't.

A lot of failures of security aren't because of some central failure, they're because of individual failures in taking appropriate care. As we move toward more of a utility model, and more and more data is supplied from big utilities whose entire existence depends on maintaining a high degree of security, I think we'll ultimately see more secure data.

Electric utilities have tended to be highly regulated. Do you see the same thing happening with computing?

My opinion about that has changed quite a bit, even since I began writing the book. Originally I thought the modularity of computing implied that we could have a very diverse set of suppliers whose services would be joined together through a lot of industry standards. So my initial imagination of the utility industry was of a lot of different companies doing different specialized things and competing with each other in a way that you don't see with electricity, which tends naturally to become a local monopoly. There's no reason that computing needs to be a local monopoly, since you can supply these things in many different ways from many different places.

More recently, though, I think we've seen a lot of pressures to centralize and build utility data centers of really massive scale, which requires a lot of money and a lot of expertise. That implies that we'll see a great deal of centralization in the industry. If that does come true, if we have monopolies or oligopolies begin to form, I think inevitably we'll see more governmental regulation the way we see with other utilities.

You claim that there was a democratizing effect from the electric grid. Do you think the same thing will be true from the computing grid?

Yes. Once you start computing as shared services, you can gain great economies of scale and you can push down the price of computing even as you expand the availability.

The great advantage of this model is probably for smaller companies, which have been at a disadvantage to bigger ones because they haven't been able to build big data centers or put into place big ERP systems. As soon as you move to the utility system, you suddenly level the playing field and allow smaller companies to tap into the same kind of sophisticated computing operations that have been available to larger companies.