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On the other hand, if she would have 100 local PCs in her network, a DHCP router would've assigned 100 IP addresses, which in return would've avoided triggering flooding policies. Bad virtual machine setup, on the other hand, could lead to a single IP address for 100s of machines, resulting in her aforementioned triggering of flooding policies.
And yes, I'm looking forward to the order entry due to "please rewrite my applications" requests :)
The issue Lori brings up is a network provisioning (lack of IP addresses) rather than a cloud-specific one. It would be the same if she had 100s of (non-cloud) physical machines; unless she supplied non-NATed PCs to test, there would still be the confused web-apps. So I would contend that the lack of resources (IP addresses) caused the issues she described, rather than cloud computing. In my opinion the design assumptions of the applications being deployed over cloud infrastructures are not in line with the new reality of execution environments (e.g. assumptions of non-NATed machines).
Theres a whole bunch of applications that need to be re-written due to (1) Cloud computing execution platforms (2) Multi-core processing environments. Thats good news for developer firms!
For the small-medium businesses who are struggling with server issues, think about investing in a load balancer.
Please let me know, I'm genuinely interested where you see that connection, for what business need, and for what technology problem...