Cloud Computing has a higher ROI, since the same infrastructure can be used well beyond its maximum real capacity. Cloud computing allows data centers to overbook the resources they have, using techniques such as scaling machines that aren’t being used down, and rotating processing resources between machines while they execute time consuming IO procedures. Cloud also has added features such as self provisioning and automated user controlled instance scaling. Given these features pricing, financial projections and capacity management can be quite complicated often being based on statistical analysis of predicted customer usage models.
With Virtualization the resources paid for by the customer are booked and dedicated to that customer, scaling up or down based on usage isn’t an option (at least not as dynamically as with cloud computing). Thus the Data Center infrastructure can’t be overbooked and has a much lower ROI. Yet its a lot simpler to manage and price.
The key component needed for cloud computing is intelligent routers that allow quick provisioning for cloud instances assigning IPs automatically from a pool of IPs. With the current trend of cloud computing its no wonder that even in this economy Cisco reported exceeding their projected profits for the last year, most probably the rise in profits is driven by data centers swapping out their old none cloud enabled network equipment with cloud computing enabled ones.