Recently, Joanna Rutkowska wrote that IaaS cloud services are insecure without hardware support for separation between tenants, citing Bruce Schneier's recent article on cloud insecurity.
However, successful IaaS cloud services like Amazon Web Services are enabled by commodity hardware (using the Intel x86 instruction set), free operating systems (Linux), and the ubiquitous TCP/IP and SSL protocols. Today's IaaS providers already have massive investments in commodity hardware, and hardware support for tenant isolation would seem to be a ways off, both in hardware development and adoption by providers.
I am more concerned about SaaS services and isolation of clients. How I can be sure my Office365, SalesForce, or other SaaS service can successfully and permanently isolate and protect my company's data? I don't see how hardware support for isolation can be extended into the realm of SaaS services unless it is in terms of per-customer encryption of data.