How BIG Is The Cloud Computing Market?

How BIG Is The Cloud Computing Market?

Henry Ford, industrialist extraordinaire, knew the value of his Model T in the American market. That is why, contrary to the popular belief at that time that customers should always be provided choices, he refused to offer his now-iconic product in multiple colors, going as far as to say, “They can have it any color so long as it’s black.

Although the lack of options in the product portfolio may not have hurt Ford at a time when there were few, if any competitors, today it’s just not a feasible business strategy. Thus, for any new product, even cloud computing, offering the customer choice is of paramount importance.

TRIVIA: Henry Ford insisted on black because that’s the color that dried the quickest, thereby speeding up production.

In addition to having a good product (or service), the other thing that a business absolutely needs in order to be successful is a market that is large enough. In other words, having a great product (or service) that can be sold only to a few businesses will not ensure the provider’s success. That is possible only if there is a large market for what is being sold.

Now, I move to the other side of the table and try to determine if the service providers have a large enough market in their hands, and also, whether that is a growing market.

Going by the established names of IT that have already entered the cloud computing game, it is obvious that they see big dollars in this field. I had earlier referred to an industry report that predicted businesses in the United States will spend more than $13 billion on cloud computing and managed hosting services by 2014 as compared to $3 billion now.

Now, another report by technology consultant 451 Group has expressed similar optimism, with special emphasis on Amazon’s growth story in cloud computing. “In terms of market share Amazon is Coke and there isn’t yet a Pepsi,” remarked William Fellows, principal analyst of the 451 Group. Although the company has not revealed the revenue breakup from its cloud services division Amazon Web Services (AWS) in its annual report, UBS analysts estimate a figure of $500 million in 2010, and predicted to rise to $750 million in 2011 and a massive $2.5 billion in 2014. This is not far from Citigroup’s 2010 prediction of $650 million from AWS. AWS comprises Amazon’s 12 cloud computing offerings like Elastic Compute Cloud (EC2) platform, Simple Storage Service (S3) offering and others.

Jeff Bezos, CEO of Amazon, has gone on record that AWS could potentially become as big as its retail business, which last year racked up revenues in excess of $25 billion. And all this from a business scarcely four years old (See: A History of Cloud Computing.)

The second largest player in the cloud computing space, Rackspace, is also considered to have drawn in sufficient dollars last year. The 451 Group conservatively estimates that revenue from Rackspace’s cloud services was $100 million in 2010.

However, there’s still a long way to go before cloud-based products and services replace traditional IT infrastructure. As per 451 Group’s estimate, less than 10% of global IT spend is on cloud computing. However, the ratio is expected to change considerably, a lot of it due to constrained budgets post recession.

Most CEOs can see which way the wind is blowing. We see something of a perfect storm of conditions which make cloud computing interesting for them,” said Mr. Fellows from the f51 Group. “The economic crisis means companies are avoiding capital expenditure. [Cloud computing] offers them a way of avoiding capital expenditure without negatively affecting capacity, and they don’t have to provision for peak capacity.”

Therefore, we may soon hear of more providers entering the market to take a bite of the pie…

By Sourya Biswas

Sorry, comments are closed for this post.

The Meaning Of Secure Business Agility In The Cloud

The Meaning Of Secure Business Agility In The Cloud

Secure Business Agility In The Cloud As cloud continues to accelerate business delivery and shift away the balance of power from IT and InfoSec to business users, organizations need to find ways to ensure that security is part of a business process rather than an afterthought. Today’s organizations are transacting some of their most valuable…

AWS re:Invent: Billions & Billions of Dollars

AWS re:Invent: Billions & Billions of Dollars

AWS re:Invent The massive AWS re:Invent show this week in Las Vegas is a celebration of cloud computing. What was formerly debatable is now inevitable: the world is moving to cloud. Amazon’s annual cloud revenues of about $7 billion, combined with an estimated $5 billion annual run rate by competitor Microsoft Azure, and the odd…

Carve Outs And The Cloud: A Synergistic Coupling

Carve Outs And The Cloud: A Synergistic Coupling

Carve Outs and the Cloud The mergers and acquisitions market is a complex and challenging industry and the last two years has seen a rise in the number of transactions. Working with companies in this space over the last 10 years, we at RKON have seen and hopefully helped change the mindset of private equity…

Medical Professionals Face Unique Challenges Using The Cloud

Medical Professionals Face Unique Challenges Using The Cloud

Medical Professionals Using The Cloud The presence and value of Cloud tools have seeped into virtually every industry, and the medical profession is certainly no exception. However, because of the special rules regarding patient privacy, specifically those found in HIPAA, people handling patient information must follow specific guidelines that in many cases, are violated by…

SaaS Freemium Models and the Hidden Cost of Free

SaaS Freemium Models and the Hidden Cost of Free

SaaS Freemium Models We’ve all been lured into sexy “try before you buy” freemium models that provide just the right amount of functionality to get you started. Yet, it’s not quite enough to complete the job. “Getting the job done” often requires stepping up to a paid or premium version that provides more functionality, capabilities…

Hybrid IT Matures Just In Time To Tackle Complex Challenges

Hybrid IT Matures Just In Time To Tackle Complex Challenges

Tackling Complex IT Challenges Sponsored by Hybrid IT: The Next Evolution in Enterprise IT, NetApp and Verizon. Today’s sophisticated business environment demands a dynamic and robust IT infrastructure which is a far cry from the closed, controlled environments that most IT departments were created to handle. A hybrid IT infrastructure, drawing services from multiple cloud-based…

Featured Sponsored Articles
The Benefits of Cloud-Based Phone Systems

The Benefits of Cloud-Based Phone Systems

Cloud-Based Phone Systems This article has been sponsored by RingCentral, provider of state-of-the-art cloud infrastructure. Although today’s businesses rely on a host of modern technology, the century-old telephone call is as essential as ever. Of course, businesses today aren’t relying on simple analog voice calls for effective interaction with partners, suppliers, colleagues, and customers, but…

Featured Sponsored Articles
Working With Cloud White Label Partners

Working With Cloud White Label Partners

Cloud White Label Services Sponsored by CloudMGR The benefits of consolidating your cloud to one of the giants such as AWS, Microsoft Azure, and Google Cloud are improving as competition increases, with pricing wars between the service providers meaning better savings for businesses utilizing these services, and an abundance of features at user fingertips as…

Featured Sponsored Articles

CloudTweaks is recognized as one of the leading influencers in cloud computing, infosec, big data and the internet of things (IoT) information. Our goal is to continue to build our growing information portal by providing the best in-depth articles, interviews, event listings, whitepapers, infographics and much more.

Sponsor