For years now, experts have been saying that more companies are taking up cloud computing technology to run their businesses. And cloud computing is getting bigger as far as market size is concerned. It is apparent that more and more companies are adopting cloud computing technology to be competitive and to stay in business, as well as making their operations a whole lot easier to manage and carry out.
Over time, we get stories that put a number to that impression, giving solid evidence of just how lucrative the cloud computing services market really is.
Synergy Research has released a note that puts the cloud computing market at $148 billion for 2016. The analyst firm reports that vendor and operator earnings for the year would reach that and still enjoy an annual growth of 25%. Synergy Research Group’s research focused on six segments of cloud computing:
- Iaas and PaaS,
- hosted private cloud,
- enterprise SaaS,
- public cloud
- and private cloud.
These segments are then grouped into three service categories: cloud infrastructure services, infrastructure hardware and software, and other cloud services.
What are the fastest growing segments in cloud computing technology? Platform as a service and infrastructure as a service share the top position with 53% projected growth yearly. Then companies offering to host private cloud infrastructures are second at a projected growth of 35% a year, with enterprise software as a service coming in at a close third with an estimated 34% annual growth.
When it comes to providers, Microsoft Azure and Amazon Web Services continue to hold on to the top spot for Paas and IaaS offerings. While hosted private cloud deployments are more likely to be served by Rackspace or IBM.
This is good news for Amazon
In October 2016, Amazon posted an operating income of $575 million for the third quarter ending September 30, 2016. That’s good news, but if you look closer, you would find that without its AWS business, Amazon would have been in the red. And it would have been in the red for the six consecutive quarters. The AWS business helps keep the retail giant afloat, with an operating income of $861 million that swallowed up the $541 million operating loss that it got from its international business. This just goes to show that Amazon relies heavily on its AWS business and without it, the company would be in dire straits.
On the other hand, Azure is not really that profitable for Microsoft. Its 127% growth in revenue for the third quarter of 2016 was largely fueled by Visual Studio, Windows Server, SQL Server and consulting services. This news will somehow help Microsoft push its cloud services to the fore.
Another area where Microsoft leads is enterprise software as a service, a space it dominates with Salesforce.
For the fiscal year 2016 ending in September 2016, cloud related hardware and software expenditures topped $65 billion, with private cloud accounts being responsible for over half of that number. However, spending on public cloud deployments is the area to watch because it is growing much faster than private cloud technology spending.
Watch out for unified communications as a service (UCaaS)
Another area to watch out for: unified communications as a service (UCaaS) because of its steady growth. Unified communications brings together real time communication outlets such as chat, voice, mobility features, web conferencing, video conferencing, desktop sharing, speech recognition and call control, as well as traditional communication outlets such as e-mail, SMS, fax and voicemail. UCaaS therefore puts a company’s collaboration and communications application on the cloud and delivered over the Internet, among other channels.
Cisco and Citrix dominate the growing UCaaS space, while the public cloud sector is dominated by Cisco and HPE. On the other hand, private cloud spending would mostly go to HPE and Dell EMC. It is worth noting that both HPE and Cisco have scaled down their public cloud offerings. With this, however, could it signal diverting more investments to these offering rather than veering away from it?
In December 2016, Cisco pulled the plug on their $1 billion initiative as Azure and AWS continued to grow their cloud offerings. The InterCloud offering will no longer be available after March 31, 2017 and the company will be moving current workloads to the public cloud and even to other cloud providers. The pull out is indicative of smaller participants getting out of the cloud computing market. Hewlett-Packard also stopped trying to be a public cloud company in 2015 and had a round of layoffs in October 2016.
The significant growth of cloud computing technology is proof that 2016 saw cloud computing dominate various IT market sectors. This is because most of the major barriers that were identified before has been resolved and are no longer considered a hindrance to cloud computing adoption, according to Synergy Research Group’s founder and chief analyst Jeremy Duke.
Duke says that the cloud computing technology market is an attractive area for vendors and service providers because of the revenues that are pouring into the sector. Yet, there is still a lot of room for growth, giving it space to grow by 25% every year.
As such there really is no reason for companies now not to go on the cloud for their operations. As this Synergy study finds, the cloud computing market is getting bigger and bigger, because previous hindrances have been addressed. If your competitors end up using cloud computing services and you find yourself with nothing, then you are in serious trouble.
The good news is that you can partner with Four Cornerstone to help you with your move to the cloud. Whether you are planning to start using Amazon AWS or Microsoft Azure, get an IaaS or PaaS offering, create public or private clouds, and even check out hosted private cloud deployments and other cloud computing technology, we can provide a team of experts who could guide you all the way, and even do the things that you have to do but may not have the right skills to perform. Call Four Cornerstone at 817-377-1144 or fill out our short online contact form to talk to us!
Photo courtesy of Erik Schepers.