Cloud Computing Market Hot, But How Hot? Estimates are All Over the Map
February 13, 2012
There are reports that the dean of Silicon Valley venture capital firms, Kleiner Perkins Caufield & Byers, is very interested in cloud computing services, and may invest up to $100 million in the market this year. Bloomberg quotes partner Matt Murphy as indicating the VC firm’s partners “have talked about it, and are intrigued by the idea…. Companies’ comfort level and willingness to adopt the cloud is hitting an acceleration point. Now’s the most interesting time in the last 10 years to be investing in enterprise-based companies.”
Interesting time indeed. Market Research Media, cited in the Bloomberg report, says the cloud market will reach $270 billion in 2020. Forrester is a tad less optimistic, predicting last year that the market will hit $241 billion by that time. Visiongain projects the cloud services market will be worth some $83 billion by the year 2016. Research firm IDC says the market will hit about $55 billion by 2014. But analysts at HP are super-optimistic, estimating that the cloud computing market will hit $143 billion by next year. That’s a lot of billions — sooner or later, it will add up to real money…
One thing is certain, cloud is not a homogenous market by any means. I like the way Kevin Fogary at ITWorld put it: the “cloud computing market is starting to look a lot like one big data center.” Take a close look at the real structure of what the infrastructure of what cloud computing is becoming as an industry and you find familiar IT problems, versus the smooth seamless paths everyone seems to offer.
So who’s right? Estimates about the value of the cloud market are all over the map. As with any growing market, everyone has their own measures.
But what to measure? You could almost say that every piece of technology sold in the months and years to come will have some sort of “cloud” component. And, no surprise, every vendor now is all about the “cloud.” Does that mean the entire technology market is also the cloud market? How about related services?
The problem in trying to size such a market is deciding where traditional software ends and cloud begins. Or, where traditional outsourcing ends and cloud begins. It’s likely that cloud will simply be another inter and intra-enterprise service delivery channel in the years to come, especially from third-party software vendors. More telling numbers will be the savings — or additional costs — enterprises will be incurring by moving to on-demand services offered by someone else. Private cloud complicates any measurements even further — how many enterprise back office applications will be virtualized and delivered as services?
Consider this: investments in cloud computing are taking several different paths, with different sets of solutions, and different constituencies. So we need to pay attention to the types of “clouds” we are talking about. There is a market for internal or private cloud solutions, which includes “on-premises” technologies such as virtualization and registries/repositories. Then there is the market Kleiner Perkins is looking at, which encompasses third-party data centers that may support Software as a Service and Platform as a Service offerings.
My own research, part of my work with Unisphere Research/Information Today Inc., finds that the larger the company, the more likely there will be interest in private cloud solutions, versus reaching outside for public cloud services — at least on a formal basis. The survey was conducted among 257 members of the Independent Oracle Users Group, and underwritten by Oracle.
A majority of respondents, 55%, report they either have private cloud computing services in place—defined in the survey as on-demand shared services provided to internal departments or lines of business within an enterprise—or are considering or planning an implementation. In terms of actual live, on-the-ground deployments, more than to one-third of respondents, 37%, say they have already deployed private clouds, either in large-scale production or limited use. This is up from 29% in the survey from a year ago, or a 28% increase year to year.
Adoption of public cloud services — at least among the enterprises in the survey — is also on an upswing, but not as prevalent as private cloud efforts. A total of 21% of respondents use public cloud services to support their enterprises, up from 14% in 2010 to 21%. That’s 50% growth — the increase in public cloud solutions on the market, as well as increasing sense of comfort seen among executives in adopting public cloud services within their enterprises. It’s also notable that the adoption of public cloud services for various operations – from customer relationship management to application development – is fairly significant.
The difference between smaller and larger companies in terms of the types of clouds being implemented are stark. The larger companies in the survey are most inclined to be supporting their own private internal clouds. Close to half of the companies with workforces of greater than 10,000 employees (45%) have private clouds in production or in limited use. By contrast, only 11% of the mid-size companies in the survey have such efforts underway.
Public cloud adoption, on the other hand, is most pronounced among the smaller companies in the survey. One-third of companies with 1,000 or fewer employees use public cloud services, versus 19% of the largest companies in the survey.