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Friday, June 04, 2010

Cloud Market Share: 2 Percent, But Growing

Despite all the buzz and hype it has generated, cloud computing represents just 2 percent of the revenue in the IT infrastructure market, according to Tier 1 Research.  But not for long, as cloud computing is the fastest-growing business model in the sector, and will grow to more than $1 billion a year in revenue by next year.  “Slowly but surely, that 2 percent will become a bigger piece of the pie,” said Antonio Piraino, the Research Director of Tier 1, in his keynote message at Wednesday’s Datacenter Transformation Summit in Reston, Va.  Internet infrastructure is currently a $35 billion market, according to Tier 1, with Infrastructure as a Service (IaaS) cloud computing revenue expected to reach $735 million for 2010.  But that cloud market share is expected to grow to $1.25 billion nest year, $2 billion in 2012 and $3 billion in 2013.

Clouds Are Customers, Not Competitors
Tier 1 Research tracks the market for third-party data center providers, a universe that includes hosting companies as well as data center developers who lease turn-key “wholesale” space.  Although cloud computing is seen as a potential replacement for in-house server rooms and company-owned data centers, many cloud services require their own data center space, and lease it from colocation providers and data center operators.  Piraino said cloud services are creating customers for data centers, not competition.  Antonio Piraino"I believe the cloud computing growth helps the entire data center and Internet infrastructure market,” said Piraino (pictured at left).

Sean Hackett, the Research Director of CloudScape for The 451 Group, agreed that for most data center providers, cloud computing represents an opportunity, not a threat.  “This will translate into increased demand for the stuff you sell,” Hackett told the audience of more than 200 data center professionals.”

Small businesses’ enthusiasm for cloud services may translate into lost customers for some providers offering shared hosting and dedicated servers.

Enterprise Adoption Growing Slowly
Hackett said enterprise use of cloud services shows a similar pattern to corporate adoption of other outsourced services. 

The report predicts that enterprise adoption of “private cloud” services will accelerate over the next five years, and will boost business for third party data center outsourcing.  While many cloud computing providers will occupy leased colocation or third-party data center space, some will shift their business to huge public clouds served out of massive data centers.

Posted on 06/04