Cloud Computing: The sky is the limit, but where is the money ?

With the combination of several factors: economic crisis and signs of recovery, increasingly complex virtual and physical IT infrastructure, an aging server installed base, maturing new technologies and IT managers challenged to simplify infrastructure, deliver new services quickly and reduce capital expenses and operation cost, demand for both public and private cloud computing is growing.

First let’s look at a few numbers:Cloud providers Growth yoy 2009-2010

  • IDC says the total global cloud market in 2010 will be $22 billion and $55 billion in 2014.
  • IDC says the total servers and storage account for $5 billion-to-$6 billion in 2010 and $15-to-$20 billion in 2015.
  • IDC also predicts server revenue for public cloud computing will grow from $582 million in 2009 to $718 million in 2014. Server revenue for the much larger private cloud market will grow from $7.3 billion to $11.8 billion in the same time period.
  • Gartner states: Cloud services are expected to hit $68.3 billion in 2010,  a 16.6% rise compared to 2009 cloud services revenue,
  • According to IBM: The global cloud computing market is expected to grow at a compounded annual rate of 28 percent from $47 billion in 2008 to $126 billion by 2012,Amazone AWS Revenue & Growth
  • Amazone, a Pioneer in Cloud Computing, will generate a total revenue of $500 million this year and $1.1 billion by 2014 with its Amazon Web Services (AWS).
  • Based on UBS Investment Research firm, AWS gross revenue growth from 2006 to 2011 is estimated at 801 percent annual increase ($329.4 million).
  • UBS analysts believe that the total market for AWS-type services will be between $5-to-$6 billion in 2010 and will eventually grow to $15-to-$20 billion in 2014.
  • RightScale, another major Cloud Services Provider, announced a 1,000 percent customer spending increase from June 2009 through June 2010, a significant Cloud-based revenue growth, and a 100% increase in number of Cloud customers between the first quarters of 2009 and 2010 (43,030 to 80,080).

By the way, these revenue numbers are quite small compare to total IT market, Cloud Computing is still young but the offering is maturing and starting to shake the IT market, and even If Analysts experts do not agree on the same estimated numbers, all agree that Cloud Computing growth is sky-rocketing, and growth (and margin) is what everyone is looking for.

That is however a big and attractive pie, and there is no doubt that a lot of players are – or will be- running for a slice of it, so the question is: where is the money and who will be the winners?

First winners of the Cloud have been startups, development and test labs, Web businesses, online storage, content distribution and social media websites.

Private Cloud market opportunity appears to be huge, and today, many companies are testing or building their own private clouds on small-scale projects, however due to  the lack of maturity in enterprise-class cloud infrastructure products,some security issues, and some uncertainty on the real cost saving, Private Cloud will still be a small part of the pie on a short-term perspective.

Public Cloud has more potential and is the real Eldorado for now, and therefore many cloud solutions or services  providers are quickly moving from selling clouds to enterprises to targeting service providers for partnerships, to create an ecosystem and offer a complete service.

Web services hosted in the Cloud are definitively growing, customer demand is still growing fast, starting with Media Companies and Mobile Services as an example, as per numbers above, so Cloud Hosting and Service Providers market is certainly a real business opportunity, and today’s winners.

As Cloud Services is a natural evolution for Web hosting and virtualization, Many web hosters or outsourcers have rebranded their services as Cloud Services, offering Cloud, on-demand and pay-as-you-go hosting services, and many Virtualization vendors have rebranded their offerings as Cloud.

Software vendors are offering Software-as-a-Service (SaaS),

Infrastructure vendors are offering Infrastructure-as-a-Service (IaaS),

Applications vendors are offering Applications-as-a-Service (AaaS),

Platform vendors are offering Platform-as-a-Service (PaaS) etc…

If Enterprises are still being prudent in investing on Private Cloud, the Hybrid cloud is a balanced solution combining both public and private resources , managed through a common framework simplifying operations and reducing operation cost. Lately, Hybrid Cloud solutions offered by large vendors as IBM, HP, Microsoft etc has been slowly but steadily gathering interest, adoption and investment.

Finally, as per numbers above, there is a significant new business opportunity for servers and storage vendors, in both Private and Public Cloud market. Based on IDC report, almost 20% of servers purchased in 2009 were for cloud computing deployments.

In conclusion, the business opportunity is there, with real growth and profit, and I believe Web hosted services and Public Cloud Services Providers are today’s winners, Hybrid Cloud is on the rise, but in the future Private Enterprise Cloud may finally emerge as the holy grail.

Question for you is WHEN ?

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3 Responses

  1. It is certainly interesting for me to read that article. Thanks for it. I like such themes and anything connected to this matter. I would like to read a bit more soon. By the way, pretty good design you have at that site, but don’t you think design should be changed every few months?

    Whitny Meetington

    • Thank you for your comments Whitny …I do not plan to change the design of my blog too often…I think a web site design is part of your brand image and it takes time to build or change a brand image, so if it’s good you better stick to it for some time.
      Cheers

  2. In addition, here is a relevant and interesting article from eMarketer about the impact of Mobile platforms and location-based-Systems on the future of Social Marketing http://www.emarketer.com/Article.aspx?R=1007921

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