It's been an incredibly interesting, exciting, and tumultuous year for cloud computing. But, as the saying goes, "you ain't seen nothin' yet." Next year will be one in which the pedal hits the metal, resulting in enormous acceleration for cloud computing. One way to look at it is that next year will see the coming to fruition of a number of trends and initiatives that were launched this year.

The end of a year often brings a chance to take a breather and think about what lies ahead. Therefore, I've put together this list of what I foresee for 2011 vis a vis cloud computing. Here are ten developments I expect to see next year, broken into two sections: one for cloud service providers, and the other for enterprise users.

Cloud Service Providers

Prediction #1: The CSP business explodes...and then implodes. CSPs will continue to pour money into building cloud computing offerings. Large companies will invest billions of dollars constructing data centers, buying machines and infrastucture, implementing software platforms, and marketing and selling cloud services. Regional and local players will likewise do the same, albeit on a smaller scale.

There will be a frenzy of activity as every colo, hosting, and managed service provider confronts the fact that their current offerings are functionally deficient compared to the agility and low cost of cloud computing. However, by the end of the year it will become obvious that being a cloud provider is a capital-intensive, highly competitive business with customer demand for transparency in pricing.

Many new entrants to the business will conclude that this is a battle they can't win and will hastily exit the business. And don't imagine those retreating will only be small, thinly capitalized companies. Sometimes large, publicly-held companies are the worst in terms of sticking with opportunities that require delayed gratification in terms of profits. I expect that late next year or early in 2012 a private equity play will emerge in rolling up CSP offerings whose owners want to offload their failed CSP initiatives.

Prediction #2: Market Segmentation via Customer Self-Selection. Many vendors and commentators feel that the SMB market is a natural for IaaS computing because of their lack of large, highly skilled IT staffs. Sometime next year everyone will realize that removing tin still leaves plenty of challenging IT problems, and cloud computing delivers a few new problems besides. Once that realization sinks in, everyone will agree that SMBs are a natural fit for SaaS and that only larger companies should imagine themselves as IaaS users. Consequently, SaaS providers will gain an even higher profile as adoption rates increase. However, SaaS will by no means be only an SMB phenomenon -- far from it. SaaS will become the default choice for organizations of all sizes that wish to squeeze costs on non-core applications.

Prediction #3: OpenStack will come into its own. The attractiveness of a complete open source cloud computing software stack will become clear, and interest and adoption worldwide of OpenStack will grow during the next year.

I'm generally pretty skeptical when large companies like RackSpace create open source projects, as they often smack of Tom Sawyer's fence painting episode, wherein Tom got a bunch of other kids to do a chore he didn't feel like executing himself (viz CA and Ingres). The right (and only) way to do something like this successfully is to launch and support an open source project, while (and this is crucial) building a community of participants who take part to fulfill their own objectives (viz IBM and Eclipse).

Thus far, Rackspace appears to be leaning toward the IBM model. The power of a community-based open source initiative can be seen in Linux, which does it brilliantly, and OpenStack could become an analogous project that provides a free and extensible cloud platform. For budding CSPs in emerging economies, an inexpensive platform is crucial, and OpenStack will prove to be an attractive option. For CSPs in developed economies, OpenStack can provide a path to high-quality software without taking on the entire burden of development.

Prediction #4: Cloud computing takes off in emerging economies. Much of the angst about what form of cloud computing end user organizations should use (see End User Predictions below) doesn't exist in emerging economies. Most companies have no significant installed base of infrastructure, so the urge to repurpose existing hardware (or, more realistically, avoid prematurely writing off undepreciated assets) is not relevant.

Consequently, IT organizations have no reason to avoid using public cloud computing; after all, the choice is between nothing and something, rather than an existing something and a new something.

A good analogy for what is going to occur with cloud computing in emerging economies is what happened with telephony. Most of these countries, as their economies developed, hopscotched right over fixed-line telephony, and moved directly to mobile as the primary form of telephony, based on its convenience, flexibility, and lower cost.

Likewise, we'll see a rush to cloud computing since it does not require significant end user investment in wasting assets. Don't be surprised if the growth rates of cloud computing in emerging economies far outstrips that in more developed nations.

Prediction #5: Continued rapid innovation by CSPs and SaaS companies. Many people point to the astonishing rapidity with which AWS continues to roll out new features and service offerings. Its launch this week of Route53, a robust and inexpensive DNS service, is just one example of the company's continued innovation. However, AWS is by no means alone regarding innovation and creativity. Next year we will continue to see amazing new offerings from companies that create services based upon cheap and scalable infrastructure. One I ran across this week is from Qik, which provides the ability to stream video from a mobile device. While that's interesting, my friend David Spark pointed out some additional features that make the service irresistible -- when he starts streaming, his Twitter followers are alerted that he is streaming something, and they can react to his stream with questions or observations -- which are displayed in his app so that he can respond in real-time. That's cool -- and cloud.

End Users

Prediction #1: Focus on cost and transparency. I admit it, I carry an economics bias. While many people point to the undoubted advantages of cloud computing -- agility, elasticity, self-service -- my perspective is that the cloud computing revolution is that these characteristics are not new or even specific to cloud computing.

The revolution of cloud computing is that, due to scale and automation, for the first time those characteristics can be achieved at an attractive price point -- which makes all the difference. Moreover, they are delivered by CSPs in a completely transparent manner -- listed in black and white on the provider Website.

What this economic revolution and cost transparency will translate to in 2011 is a demand that internal IT groups provide the same level of transparency, and woe betide the CIO who proffers feeble excuses like "we're not really set up to identify specific costs" -- next year that will be a formula to be bypassed or banished. I got confirmation of this transparency rush during a conversation with an executive from Apptio, which provides IT-based Activity Based Costing software. He noted that the uptick in conversations with IT executives wanting to be able to identify specific costs has skyrocketed, and most of them are focused on figuring out the real costs associated with providing a private cloud infrastructure. Apptio, by the way, is delivered as a SaaS application.

This transparency demand will assuredly impose discomfort on IT groups, but it provides the foundation for the next revolution in IT, which is the explosion of applications in terms of numbers and types. Returning to economic theory, applications are the complementary good to infrastructure, and when one good's price is reduced, the demand for its complementary good increases. Since we believe that cloud computing represents an order of magnitude reduction in the cost of infrastructure, it is to be expected that we will see -- at least -- an order of magnitude increase in applications. Of course, the application explosion will bring its own problems, but at least they're associated with delivering business functionality, which is the point of IT, right?

Prediction #2: More public/private cloud confusion. The current debate raging about what the right mode of cloud use will continue, unabated, and may even get worse. There are valid arguments for both options and I won't go into them here, as I've addressed the topic several times, most recently here. However, it can be said with confidence that the pressure to provide some cloud option is only going to increase.

The desire by application groups and business units to grasp the benefits of cloud computing is palpable; one example surfaced this week, when the U.S. Federal government announced that, starting in 2012, federal agencies are being told to default to cloud-based solutions "whenever a secure, reliable, cost-effective cloud option exists." What this means is that, if you're a CIO, whatever form you want to deliver cloud computing in, it had better be ready in 2011. Extended rollout plans based on lengthy private cloud initiatives won't cut it in the fervid rush to deploy cloud computing.

Prediction #3: More hybrid cloud confusion. I see more vendor hype and end user wishful thinking on this topic than any other in cloud computing. Vendors breezily assert and end users blithely repeat that the future will be applications effortlessly, transparently, and automatically migrating between internal IT infrastructures and external cloud providers.

No cloud vendor, no matter how large or smart, can repeal the laws of physics, and migrating workloads and (especially) data between sites confronts the issue of "the skinny straw," which is the fact that the connectivity between internal sites and public cloud providers is much lower than that within either of those environments.

Furthermore, supporting seamless migration requires a sophisticated IT infrastructure and operations capability, which translates into investment and skill building. While these factors can be procured or created, it's not a trivial task to do so.

Both of these challenges will make IT executives realize that the all-moving hybrid cloud strategy is overly ambitious and needs to be scaled back. Trying to implement such a vision, for many organizations, will prove to be "A Bridge Too Far".

In 2011, people will come to recognize that the key to a hybrid strategy is proper placement of workloads depending upon cost and operational and compliance factors, and will create appropriate plans to leverage a mixed environment.

Prediction #4: Application architecture challenges. As IT organizations deploy their first cloud computing applications, they'll find achieving agility and elasticity is hard -- and requires new application architectures.

Implementing robust applications to run on less-than-robust infrastructure imposes design requirements for redundancy, failover, and session isolation. Designing elastic applications that can automagically grow and shrink in response to application load necessitates functionality that allows graceful on-the-fly configuration without human intervention.

As you might imagine, this demands a new set of technical skills for architects and software engineers. This pattern of new skills being called forth in response to the shift to a new computing platform is nothing new -- and won't change in the case of cloud computing, either. But every time an emergent platform collides with existing skill sets, IT executives are shocked anew that employees aren't prepared. Expect to see many, many articles next year about the technical skill challenges associated with cloud computing.

Prediction #5: IT operations challenges. Operations will be challenged in three ways during 2011. The first challenge is associated with process re-engineering. The manual operations practices in place at most organizations aren't sufficient for the self-service vision of cloud computing. Application groups will clamor for the immediate resource availability associated with the public cloud providers, and will expect internal IT operations to respond as quickly. That's challenge number one.

The second challenge for IT operations is associated with managing the dynamic application topologies that are fundamental to cloud computing apps. The vision of cloud computing is applications that have additional resources joining or leaving the application topology in response to load, response times, etc. IT operations will have to figure out how to implement management practices to support that vision. New types of system management software will be needed that supports dynamic operations, which circles back to the previous predication about organizational skill building.

The third challenge is one of scale -- not of individual apps, but of the total number of apps that the business wants to run. As noted in End User Prediction #1, above, the number of applications companies will be running is going to explode. Operations practices appropriate for one scale of application numbers will fall over when confronted with ten times as many applications. It's unclear how this will turn out, but it's very clear that existing operations practices will be stressed as never before.

And, by the way, this is all without the previously-developed public cloud applications being dropped off at Operations doorstep with a note asking it to take responsibility for this abandoned child (we call this phenomenon "the cloud boomerang").

So there you have it. My list of ten things we can expect to see next year in cloud computing. If you thought 2010 was exciting, you'll find 2011 exhilarating. If you found 2010 full of cloud hot air (fog?), you'll hate 2011. What do you think? Are there other developments we can expect? If you have thoughts of your own, please feel free to comment.

Bernard Golden is CEO of consulting firm HyperStratus, which specializes in virtualization, cloud computing and related issues. He is also the author of "Virtualization for Dummies," the best-selling book on virtualization to date.

Follow Bernard Golden on Twitter @bernardgolden. Follow everything from CIO.com on Twitter @CIOonline