The “cloud” is offering a full range of benefits to companies who are moving away from implementing in-house solutions to maximizing the functionality and flexibility of the cloud. By leveraging application hosting solutions, companies can maximize the value of their dollars spent, while still taking advantage of full capabilities.

A recent Barron’s report highlighted that while this presents great opportunities for companies leveraging application hosting services, it can be a somewhat murky outlook for technology vendors and their shareholders. As corporate customers are gradually cutting back on big-ticket items, they are redirecting smaller amounts of money to computer-services providers.

Walter Price Jr., an industry expert who has been managing technology funds for more than 25 years, warns that it could be another nuclear winter in tech spending. The consensus among key players is that big global companies are not seeking to spend their mounds of cash on large capital hardware investments. Instead, they are taking advantage of the “public” cloud computing platform in which more tasks are handled for free.

A private cloud is generally owned and operated by the company that deploys it. In making the transition to the public cloud, nearly all information technology operations of a company – including application hosting – could be managed by a third party that owns clusters of significantly powerful data centers. A company would access its data when necessary over the Internet.

A 2009 survey of technology vendors conducted by Primary Global Research found that at least 10 percent of those polled said the cloud would be part of their strategy by 2011. The firm now estimates that 80 percent of its survey group are already working on an implementation plans that includes application hosting and cloud computing.

The economics of cloud computing and application hosting suggest the dawn of the most dramatic transformation of enterprise technology in 20 years will actually arrive ahead of schedule. It would be considered on the same scale as the disruption caused when client-server personal-computer systems surpassed mini-computers and big-iron mainframes.

It is expected that in the very near term, companies will focus on investing in their own private cloud-computer systems and application hosting solutions. This will benefit the traditional tech giants that sell servers, storage, personal computers and business software. At the same time, the clock is actually ticking for the current giants as the ultimate “public-cloud” model is truly analogous to power utilities and computing power will be sold based on usage and need.

According to Price, the big winners in the cloud era will be software-as-a-service (SaaS (News - Alert)) companies that host business software applications and provide them as a subscription service via the Internet.

The variety of application hosting companies that are gaining attention including Joyent, a six-year old San Francisco-based company that provides cloud services to thousands of customers, including professional networking-service LinkedIn (News - Alert). As application hosting continues to grow in demand, companies such as Joyent will enjoy strong demand and market dominance.