Sky-high growth forecast for cloud services

Gordon Peters
Thursday, 24 June 2010 01:30

IT Industry - Market

Growth in cloud services is surging around the world as cloud computing rapidly outstrips the projected growth rate for traditional IT products. Forecasts predict that global revenues from cloud services will reach $55.5 billion by for for 2014, up from more than $16 billion last year.

In its latest report on the state of cloud services, IDC says the growth of revenue from $16 billion to $55.5 billion will represent a compound annual growth rate (CAGR) of 27.4 percent, and that this rapid growth rate is over five times the projected rate of growth for traditional IT products (5%), further illustrating that public IT cloud services are 'crossing the chasm with modest revenue, but very fast growth.'

Senior vice president and chief analyst at IDC, Frank Gens, says that for vendors, cloud computing is 'critically important for two key reasons - market growth and leadership disruption,' and, he adds 'the cloud model will propel IT market growth and expansion for the next 20 years and will help the industry to more rapidly develop and distribute a new generation of killer apps, and to more successfully penetrate small and medium-sized businesses.

'As this happens, industry leadership ranks will certainly change. Additionally, our research with many CIOs about their plans for adopting cloud computing shows that IT customers are excited about the cost and agility advantages of cloud computing, but they also have serious concerns about the maturity of cloud computing offerings, specifically around security, availability, cost monitoring/management, integration, and standards."

Other key findings from IDC's report include:

• While spending on public IT cloud offerings in 2014 will reach 12% of the size of traditional IT product spending, it will be over 25% of the net-new growth in traditional IT products. Growth-oriented IT vendors should invest in proportion to this net-new growth impact, rather than cloud services' revenue impact.

• Among the five primary cloud services segments forecast in the report, cloud applications dominated in 2009, but IDC forecasts that by 2014 a less skewed distribution of revenue will occur, with applications accounting for a little over one-third of market revenue and increased revenue shares in infrastructure and platform-as-a-service (PaaS) segments.

• Adoption growth will shift away from US dominance. Revenue from public IT cloud services in 2009 was heavily concentrated in the United States (70.2%), but by 2014 the US share will drop to 51.4%, with other regions/countries - notably Western Europe and Asia/Pacific (excluding Japan) - growing share rapidly.