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 ?

Advertisements

5- We Need Smarter and Greener Telecommunications Networks

You probably know that the electricity used to power all computing Data Centers in the world generate more CO2 emissions than the Air Transportation industry, despite all these planes burning huge quantities of  jet-fuel in our skies!     

Green Telecom Network Capex, World Markets, 2009-2014

 

 Therefore reducing data center power usage is one of the strategic focus of any CIO or Data Center manager, as well as for all computers, servers, storage vendors, not just for the satisfaction of being  Green but also and first to reduce operating cost as power is one of the major cost of operating a Data Center.     

Communications Service Providers (CSPs) & Operators have a double challenge as they also need to reduce the power consumption of their Network Operation Center (NOC), especially now that fixed and mobile communications are growing fast, the volume of data transmitted is exploding and their network is quickly expanding to satisfy the demand.     

Telecom Networks have become a significant contributor to global greenhouse gas emissions and growth, and all CSPs are being challenged to reduce their carbon emissions , to use more energy-efficient hardware to power their network elements (micro-processors, servers, storage, network switches vendors are being challenged to manufacture and sell more energy-efficient equipments), to use new  and more efficient cooling technologies, to optimize their resource with virtualization technologies, to use renewable energy, to Recycle & Reuse, in a nutshell to be Smarter and Greener.     

Most of them today are putting a lot of effort and resources in greener initiatives to meet these challenges, to reduce their energy usage and carbon emissions, which in the end will improve their Capital Expenses (Capex) and the Total Cost of Ownership (TCO) of their network and also dramatically reduce their operating expenses (Opex).     

A recent report from Pike Research, Cleantech Market Intelligence, addresses in much detail all the following questions:     

•             Who are the leading providers, OEMs, and technology companies that are driving green telecom initiatives?     

•              What are some of the best practices being implemented today?     

•              What is the impact of green telecom on emerging markets versus developed markets?     

•              What is the business case for green telecom, and which components have the most impact on ROI?     

•              What is the market opportunity for green telecom in terms of Capex spending?     

•              How large is the opportunity for renewable energy in telecom networks?     

•              What is the potential for carbon emissions reduction through green telecom initiatives?     

I have included in this blog two charts from the Pike Research Report.     

So many new technologies, solutions and best practices are available today to help CSPs meet their challenges, it is also a great market opportunity for vendors and integrators:     

•             Network and data center platforms and designs , More efficient cooling technologies and design     

•              Access network efficiency improvements: DSLAMs, ONTs, BTSs, etc.     

•              Smart processors, controllers, and sensors     

•              Fuel cells and batteries     

•              Remote monitoring solutions (hardware and software)     

•              Solar PV for network power,  Wind energy for network power, Biomass for network power     

•              Improved ASICs,  Low Energy CPUs, IP Softswitches, Reduced Power RF Amplifiers     

•              Hardware, Software and Applications Virtualization     

•              Cloud Computing  etc…     

Mobile Network Green Capex, World Markets, 2009-2014

 

 So it should be a Win-Win for all, reduce cost and increase profitability and competitiveness for CSPs, additional revenue for innovative technology vendors and improved carbon emission for our planet.     

As so much of our life in the future will depend more and more on communications, 

     

We Need Smarter and Greener Telecom Networks!