SEATTLE — From his ninth-floor office in downtown Seattle, Hewlett-Packard’s cloud computing outpost, Bill Hilf can see the Space Needle, the Pike Street Market and the future of computing.
“There’s two security companies setting up over there,” said Mr. Hilf, the vice president of cloud product management at HP, pointing east. Toward the waterfront is Blue Box, a cloud hosting company. South, in Pioneer Square, is a cloud engineering outpost of EMC, a data storage giant, as well as lots more start-ups.
“It’s like Detroit used to be for car companies,” he said. “The galactic players are here, and they are creating lots of little companies. The only thing driving anyone away from here is the weather.”
Rain or shine, Seattle has quickly become the center of the most intensive engineering in cloud computing: the design and management of global-scale data centers. Last year, Mr. Hilf was hired from Microsoft’s giant cloud business, Azure, to spearhead HP’s efforts to build its own cloud service (based in Seattle, not at HP’s home in Silicon Valley), and build technology for other cloud companies.
It was a 13-minute drive from Microsoft to his new office, above the Seattle convention center. Amazon Web Services, the biggest of the cloud companies, is a six-minute walk from HP, in downtown Seattle. North over Queen Anne Hill, in the Fremont district, Google has a thousand engineers working on its cloud system. In Kirkland, near Microsoft, there is another Google facility.
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It’s too early to say if this concentration of big engineering talent is sustainable over the long haul and whether it will evolve into a flywheel of innovation like Silicon Valley. For now, however, it appears to be attracting a lot of money and talent, eager to grow in the cloud.
“I could be completely wrong, but it seems like the valley is focusing on consumer stuff, like search and social, while we’re building infrastructure, things that are a lot harder to learn,” said Jared Wray, chief technology officer of cloud at CenturyLink, a large provider of Internet connectivity to business. “There’s a generational change.”
Last November, Mr. Wray’s company, a provider of cloud computing services to small and midsize businesses called Tier 3, was bought by CenturyLink for an undisclosed sum. “We’ve grown the engineering team 20 percent, to 100 people, since then,” Mr. Wray said. “They want to have 400.”
Besides talent that knows how to build infrastructure, Seattle has a number of leading cloud software companies. Tableau Software, a leader in the computer visualization of large sets of data, is across the street from Google in Fremont. Concur, used for online expense forms, is in Bellevue, near Microsoft Azure. Other companies include Chef, which produces open source cloud automation software; Apptio, a cloud monitoring company, and Socrata, which stores and publishes over 100,000 data sets for 150 government organizations.
“It’s a little more collaborative than the valley, because we still have lots of hard problems to solve in cloud computing,” said Kevin Merritt, founder and chief executive of Socrata.
Others note that Washington State has tougher noncompete clauses in its labor laws than does California, which can give established firms some peace of mind about setting up shop in Seattle but frustrate venture capitalists by making it harder for people to walk out of one company and start a competitor.
For all the action, Seattle still has only one major venture capital firm, compared with scores of such businesses in Silicon Valley. That firm, Madrona, has participated in 15 cloud deals since March 2012, raising $68 million of $304 million total venture capital for cloud companies in the Seattle area (the rest came from 20 other investors, mostly in the valley.) Those companies, all still private, are valued at $2.3 billion“This is the next two years,” said Matt McIlwain, a partner at Madrona, standing before a whiteboard where he brainstormed more than 20 areas where new cloud businesses might be built. As for the “relative dearth” of venture money, he said, the increasing number of people getting rich at the area’s new tech companies would bring in a lot of angel investors in Seattle. “The big question in town is what Steve Ballmer will do with his money.”
Besides, perhaps, buy a basketball team in Los Angeles. (Mr. Ballmer, a former Microsoft chief executive, has agreed to pay $2 billion for the beleaguered Los Angeles Clippers.)
The roots of Seattle’s strength in cloud computing, longtime observers say, goes back to the mid-1990s, when Microsoft, long the sole big power in Seattle tech, began doing extensive work in distributed computing, or making computers work together in problem solving. That concept is the root of what cloud computing is today: lots of computer servers working together for various tasks.
Several Microsoft veterans played key roles building out Amazon’s cloud. In particular, James Hamilton, a former database specialist, is credited with making cloud computing far less expensive.
Another factor is the growing presence of the University of Washington’s computer science department, now considered a leader in distributed computing. “There’s an argument that Seattle owns the cloud now,” said Ed Lazowska, who holds the Bill & Melinda Gates chair in Computer Science and Engineering at the university. “Universities are always part of the axis” in building out a regional tech center, he said.
The university, which awards about 250 computer science degrees a year, is now working on courses in machine learning, which is how computers, particularly in the cloud, study and adapt based on big streams of data.
“The cloud and big data are closely connected,” Mr. Lazowska said. “We’re incredibly lucky to be in Seattle.”