Cloud Computing is not Capital Intensive?

From a WSJ article on VC spend, it would seem that capital intensive technology such as networking equipment, telecommunications, semiconductors, solar and alternative fuels are not getting any money - two snippets:

"We're preoccupied by capital efficiency," said Bob Ackerman, a venture capitalist at Allegis Capital in Palo Alto. "You look at the capital requirements and risk-reward ratio [for areas such as clean technology] and it becomes very, very difficult."

Preoccupied by the low spend and quick buck in other words. Not sure the risk/reward ratio in easy-to-reproduce services is any better though, but I guess you fail quicker so can redeploy any capital left faster. Fred Wilson had an interesting post on the changes in VC economics a day or so ago.

Then there is:

Navin Chaddha, a venture capitalist at Mayfield Fund, said his firm was interested in investing in online education, online health care and cloud computing this year, but was shunning capital-intensive industries such as biofuels. And he is being choosier in areas like networking, storage and telecommunications. "You have to be selective" and look for disruptive innovations in those fields, he said.

Cloud computing not capital intensive? Somebody's been selling Snake Oil to those nice VC chaps again I suppose if its only defined as Free-to-use-and-f*ck-all SLA consumer presentation layer web services sitting on top of the big iron then it isn't, but last time I looked Cloud Computing of any form of industrial quality had big transport, hosting and middleware requirements that ain't solved yet.

Update - good counterpoint by Ovum's Vuk Trifkovic pointing out that Cloud is capital intensive, but not as capital intensive as some of the others mentioned.

Whjch prompts a further thought - In theory capital intensiveness raises barriers to entry, reducing competition and lengthening the time a market leader has in the sun. Also, when all is said and done the patents are easier to protect. Perhaps that explains Cloud's popularity for "WebTech" VCs, despite it being pretty ephemeral right now as fa as deplyability is concerned - its the affordable face of capital intensive infrastructure industries.

And that prompts a further aha - its mainly large companies (Amazon, Google, Microsoft) that are building the infrastructure layers right now.

Update II - but, on my side of te argument, note that Facebook is now building its own datacentres. That, dear reader, is Capital Intensive!