Here are nine basic facts about private cloud systems, courtesy of Sajai Krishnan, CEO of ParaScale:
1. Private cloud computing can consist of on-demand applications, or storage, or both -- it doesn't matter.

2. It can be based on in the Internet, or on an Intranet -- it doesn't matter.

3. It is easily scalable. Extra storage nodes can often simply be plugged into the system.

4. The underlying technology consists essentially of commodity elements, including servers, storage arrays and data controllers.

5. You can buy or rent cloud storage -- or both. Cloud storage is not just about sending your files off into the Internet. Renting cloud storage (public cloud) or buying cloud storage (private cloud inside your firewall) is a choice, not unlike buying or renting a car.

6. Cloud storage is all about bulk storage, not Tier 1 transactional applications. It is usually not about primary Tier 1, mission critical, transactional storage. It is about data that needs to be accessed only occasionally, and possibly never.

7. You can start with small cloud and scale up as needed. You don't have to be at Amazon scale to realize the major benefits of cloud storage. Moore's Law is your friend; you get great savings when you build your storage cloud with a few servers or hundreds. You can easily start up a useful storage cloud with as few as three to five servers.

Service providers can build out different kinds of clouds with hundreds, rather than thousands of nodes, and thus provide very different services.

Service providers could host a separate cloud for an enterprise customer in a co-location center, thus providing economy as well as security.

8. Storage clouds can be tuned for specific uses. When people think of Amazon S3, they are looking at just one type of cloud. By buying different servers (tuning CPU, memory and hard drives), you can change the performance characteristics of your cloud. You can have clouds tuned for archival needs and be very cost-effective, or you can tune clouds for streaming media performance. The latter, by its very nature, will be more expensive to run and maintain.

Service providers can now build different types of clouds and offer different kinds of services.

9. Clouds are designed to be self-managing. By its very design, a cloud cannot work if it is heavily in need of IT supervision. Automation in storage tiering, provisioning, deduplication and in other factors is a key element.