Coghead Closure Shows the Risks of Cloud Computing

Govind Davis, a Coghead Inc. customer, didn't see its sudden closing coming. Enticed by the cloud computing vendor's low-cost service, Davis built some of his customers' applications using Coghead's online database. Now his company, MCF Technology, has nine weeks to extract data from Coghead and build new applications for it, some of which will run on Intuit Inc. (Nasdaq: INTU)'s QuickBase, also in the cloud.

Davis is still a huge proponent of cloud computing -- but a wiser one. "We'll be a little more wary with startups, as we realize the risk of going with one can be real," Davis said.

On Tuesday, a few days after Coghead said it was shutting down, a more widely known cloud vendor -- Google (Nasdaq: GOOG) -- had a brief outage of its Gmail service because of a data center problem. Undaunted, Google announced that same day that it will start charging for Google App Engine, its Web-based application platform (or platform as a service).

No one should expect cloud computing to be infallible; software and servers never are, no matter where they reside. But Coghead's closure lends sobriety to the excitement surrounding cloud computing, which has attracted entrepreneurs big and small and fueled a new wave of venture capital in recent years.

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