How BIG Is The Cloud Computing Market?

How BIG Is The Cloud Computing Market?

“A market is never saturated with a good product, but it is very quickly saturated with a bad one.”
– Henry Ford (1863-1947), American industrialist and pioneer of assembly line production.

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 (See: Where Is Cloud Computing Going? Up, Up And Away!).

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

sourya

Sourya Biswas is a former risk analyst who has worked with several financial organizations of international repute, besides being a freelance journalist with several articles published online. After 6 years of work, he has decided to pursue further studies at the University of Notre Dame, where he has completed his MBA. He holds a Bachelors in Engineering from the Indian Institute of Information Technology. He is also a member of high-IQ organizations Mensa and Triple Nine Society and has been a prolific writer to CloudTweaks over the years... http://www.cloudtweaks.com/author/sourya/

2 Responses to How BIG Is The Cloud Computing Market?

  1. […] “Although the company ( Amazon)  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. “[Source] […]

Comics

At CloudTweaks, we're plugged into the cloud, the internet of things and all that the web has to offer. From wearable technology, to mobile computing, cloud computing and big data, CloudTweaks is your source for updates and news on the most innovative technology.

Popular

Top Viral Impact

Cloud Infographic – Monetizing Internet Of Things

Cloud Infographic – Monetizing Internet Of Things

Cloud Infographic – Monetizing Internet Of Things There are many interesting ways in which companies are looking to connect devices to the cloud. From the vehicles to kitchen appliances the internet of things is already a $1.9 trillion dollar market based on research estimates from IDC. Included is a fascinating infographic provided by AriaSystems which shows us some…

Cloud Infographic: Disaster Recovery

Cloud Infographic: Disaster Recovery

Cloud Infographic: Disaster Recovery  Business downtime can be detrimental without a proper disaster recovery plan in place. Only 6% of businesses that experience downtime without a plan will survive long term. Less than half of all businesses that experience a disaster are likely to reopen their doors. There are many causes of data loss and…

Cloud Infographic – The Internet Of Things In 2020

Cloud Infographic – The Internet Of Things In 2020

Cloud Infographic –  The Internet Of Things In 2020 The growing interest in the Internet of Things is amongst us and there is much discussion. Attached is an archived but still relevant infographic by Intel which has produced a memorizing snapshot at how the number of connected devices have exploded since the birth of the…

The Industries That The Cloud Will Change The Most

The Industries That The Cloud Will Change The Most

The Industries That The Cloud Will Change The Most Cloud computing is rapidly revolutionizing the way we do business. Instead of being a blurry buzzword, it has become a facet of everyday life. Most people may not quite understand how the cloud works, but electricity is quite difficult to fathom as well. Anyway, regardless of…

Featured Sponsors

The Internet of Everything Opens Up The World

The Internet of Everything Opens Up The World

Shaping The World With New Technologies As a connected collection of intelligent objects, the Internet of Everything promises to open up those areas of the world hardest hit by economic, political and agricultural blights. Relatively inexpensive devices, paired with revolutionary energy sources and unprecedented access to information offer great promise to farmers and workers in…

Sponsors

What Is A Hybrid Cloud?

What Is A Hybrid Cloud?

What Is A Hybrid Cloud? With the emergence of cloud-computing technology comes the addition of new terminology. The terms public cloud and private cloud are reasonably well understood. However, a hybrid cloud can mean different things to different people. Under The Engine Perhaps the best way to define or explain a hybrid cloud is to…

Placement Opportunities - Find Out!

Established in 2009, CloudTweaks is recognized as one of the leading influencers in cloud computing, big data and 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.

You can help continue to support our community by social sharing, sponsoring, partnering or contributing to this great educational resource.

Contact

CloudTweaks Media
Phone: 1 (212) 763-0021

Join Our Newsletter