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Erlang seems to be very low level and performant on networks, but does not have a very rich type system or many of the things that other functional languages offer, so it seems to me that it will become the lowest level development language for clustered programming, until something else comes along and offers a decent clustered VM AND high level constructs. Any thoughts on this?

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C is the C of clustered computing.

At least, every HPC cluster I've seen had lots of C and Fortran running MPI, and never Erlang.

If anything, trends seem to be towards grid standards which are language agnostic rather than Erlang's specific messaging protocol. Interpreted languages are getting an edge in for gluing the heavy lifting together, a role which Erlang might be a good match for, but if you're spending hundreds of thousands of pounds a year running a cluster, you don't want the CPU time to be taken up running interpreted bytecode for anything which could be converted to a faster language.

Pete Kirkham
Erlang is a compiled language - most modern production systems compile with the HiPE compiler which generates object code.Where people get confused is that the Erlang VM has its own code loader and binary file format, so they tend to think that BEAM is always an opcode-type format (which it can be).
Gordon Guthrie
@Gordon I said Erlang would replace interpreted languages (Python in particular), not that Erlang is an interpreted language.
Pete Kirkham
@Pete Kirkham - you have an ambiguous but clause then :)
Gordon Guthrie