Is cloud going to create bottlenecks in infrastructure?

One of the reason being that disk fetch in a cloud is very expensive with the overhead of network,cache algorithms,OS etc. in the cloud.

Cloud and virtualized infrastructure is creating more pressure to get things into memory.

So what would be the future of memory management & GC in a VM on cloud?
I think this calls for processors which can execute byte codes directly! So we do away with abstractions of OS.Although we have appliances introduced into the market they are far from satisfying!