Companies will increasingly rely on the cloud for data storage/services. Google, Microsoft, et al will vie to provide services in this booming market.
How will cloud computing revolutionize the competitive landscape?
The cloud is an interesting concept and, in my opinion, represents the evolution of the IT journey that we have been over for the last hundred years. It represents essentially a new way of doing business and a new way of offering services. We live in a generation today where the world is heavily connected and, if you think back in time, this new connectivity in the cloud is driving a new way of developing new applications, services, and the next generation of platforms.
Historically, it was big government who led the enterprise revolution. Then it became big enterprises, and now it's the consumer. And why is this happening? It's because of the cloud. And the cloud is not just the pure old Internet. The cloud represents a new way in which services are offered and the way in which consumers as well as enterprises interact with others around them.
It's a dynamic environment. Everything is on demand, self-service, and almost on a rental basis as opposed to capital expenses. So it represents a different way of thinking. It allows enterprises to look at new ways of offering services and interacting with their supply chain.
But it also provides tremendous challenges because the cloud is not necessarily going to make things easy. It's going to make things cheaper if done correctly. And so you're going to have traditional players, who concentrated on offering high power, dedicated servers, losing ground to players who offer low power, extremely cost efficient servers. So you're going to look at new ODMs coming into this market, and it's going to open a new battleground. Service providers will compete with traditional enterprise IT providers, like the Ciscos and the Avayas of the world, in offering new services. So it's going to provide challenges, it's going to provide opportunities, and it's going to reshape the entire communication and the computing landscape.
What challenges will enterprises face transitioning to a cloud based platform?
Everybody and anybody who is going to be successful in the next decade or so has a plan to attack the cloud. The traditional enterprise IT players, whether they're on the hardware side or on the software side, whether it's an Oracle and a Microsoft or a Cisco or an Avaya, or an HP or a Dell, has a plan to essentially address the cloud.
But they are going to be challenged. The service providers, the Verizons of the world, the AT&Ts, the Vodafones are not sitting quiet. Traditionally, the Verizons and the AT&Ts provided broadband connection to the enterprise. Now the AT&Ts are looking to get into the enterprise and offer a range of services.
So everybody is looking at this new paradigm and trying to figure out how they can create value for their enterprise customers and essentially preserve their position. So it's going to make for some exciting changes.
The big issue with the cloud is essentially security, and actually it's more than security. It's security and trust. As we look at what's going on in today's environment, we'll talk about data breaches. That's providing a lot of pressure to the enterprise IT to basically harness the power of the cloud, but do so in a manner that preserves the enterprise IT IP, and that's going to provide challenges. So the people who will succeed are those who are going to work with their enterprise IT clients and provide a level of trust, a level of security that the enterprise IT people can live with.
Companies like Amazon and Google and Microsoft are other players that are targeting this market. So you're going to see a tremendous new battleground. HP, IBM, EMC, all of them are going to be out there in this market creating new opportunities and having new services that we can't even think of today.
What will the market size and growth rate be for enterprise cloud computing?
When you look at the cloud, it's important to segment the cloud between the different verticals, and I try to look at it from a point of view of the enterprise spending on the cloud, the consumer, and then you've got the new market, which is essentially the Internet of everything and how that that harnesses the cloud. We size up the market right now at about $70 billion in terms of enterprise spending on the cloud, and that market we estimate will grow to about $250 billion by 2017. Remember, while this is a huge growth, this is still a miniscule portion of the total enterprise spending on IT, which is roughly on the order of about $2 trillion.
So the cloud is going to be important, but it's not going to happen next week or even in this decade. It's going to be a transition into this market, but it's going to become big, and it's going to reshape the rest of the enterprise IT market.
Jagdish Rebello Senior Director, Consumer & Communication Research, IHS Technology