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Simulation software firm Exa has a customer list that reads like a who's who of the automotive industry: Audi, BMW, DaimlerChrysler and Ford, to name a few. The automakers rely on Exa for computer-aided design software that enables them to build the most aerodynamic vehicles possible.

And Exa relies on IBM to provide the super-duper computing power that the carmakers need in fits and starts.

"The key that's turning us at this point is that with IBM we have almost unlimited capacity," says Steve Remondi, CEO at Exa, in Burlington, Mass. "We have IBM's balance sheet at work, as we like to say here, and that has made an enormous difference. Now there is no size problem, or set of computational work, that we can't do."

Exa is one of a growing number of companies expanding computing oomph with hosted, on-demand offerings. While Exa uses IBM's Deep Computing on Demand center, other companies opt for Big Blue's Linux virtual services on the mainframe or Sun's Sun Grid, for example. With these offerings, corporations get expansive computing power at their fingertips and pay only for what they use.

While the basic idea is nothing new - time-sharing was the way many companies harnessed computing power in the 1960s and 1970s - the prospect of being able to consume computing cycles on a grid or mainframe for specific, computationally intensive workloads is bringing more companies back around to the idea of renting instead of buying CPUs.

"What makes this interesting now is that businesses have a business reason to acquire resources in this manner," says Mike Kahn, managing director at The Clipper Group.

As an example, he cites pharmaceutical companies, which have huge surges in computing requirements at certain stages in their drug testing. These companies would likely find it makes better business sense to tap into the resources they need for peak demands, rather than spend the money to buy hardware that would sit idle much of the time, Kahn says.

Clout for the little guy

At the same time, the ability to pay only for what you need and avoid upfront capital expenditures opens the door for smaller companies, such as Exa, to have computing power that makes them competitive with larger firms.