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Cloud Services – Market Size and Landscape

Following up on my post defining and disambiguating (hopefully) cloud services and cloud computing, I hope to quantify the cloud services market and lay out the landscape to better understand the various players in this industry.

Cloud Services Market Size – 2014

IDC and Gartner probably have the best possible data points for any given industry. In this case, let’s assume they are reasonably accurate. We see that the Cloud Services market is forecast to be approximately $150B by 2014 from $68B as of this year.

So what?

1. We will see more applications being deployed in the cloud. Ergo, more data and content will move from being hosted locally to ubiquity.

2. Most of these services will occur in the enterprise landscape as almost all companies are cutting back on datacenter expenditures and are looking for cheaper and efficient application hosts. Case in point – Salesforce, which is enjoying greater success in recent times. Please take a bow Marc Benioff for envisioning and to some extent, helping create this landscape 10 years back!

What exactly lurks in the murky and dark recesses of data centers? Who are the players? Please click on image below:

Cloud Services Landscape

If you can dash to my earlier post about cloud computing/services, you will find that the the 2 boxes at the bottom of the landscape image indicate how virtualization and hardware are the true cloud computing pieces. The rest can and should be called cloud services. In combination with “Infrastructure as a Service” (Iaas), they form the basic building blocks for cloud services.  Notable names in these areas are Sun (now Oracle), HP, Dell, IBM, EMC, VMware (vSphere), Rackable, Eucalyptus, Joyent and Amazon’s EC2 web services.

Platform as a Service (PaaS) has a few major players: Microsoft (with Windows Azure – thanks to Ray Ozzie), Joyent and Appistry.

Software as a Service (SaaS) has many players and is much more fragmented. It is really the Cloud Services sector that most of us refer to when we mention cloud services or computing. Notable players include: Google (docs, apps), Microsoft Live Services, Microsoft Sharepoint, Salesforce.com, workday, netsuite and appexchange.

As it must be obvious, only SaaS is open to disruption for smaller players or startups. The rest might need scale, higher capital outlays, more consumers who can be locked in and startups are usually short of all of these. Hence, an easy entry point for startups or potential disruptions could be offering a great solution in SaaS and slowly, branching out into a platform and then infrastructure and all the way to virtualiaztion/hardware.

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What is Cloud Computing? Is Cloud Services same as Cloud Computing?

Cloud Computing is “Internet-based Computing”.
Broader Definition: Cloud Computing is the use of resources such as server data and applications (think enterprise payroll systems, MS Outlook) from a location not limited to a specific geography. In other words, “the cloud” is basically a black-hole to the user and his/her data becomes magically available anytime anywhere on any device.

Then clearly, Cloud Services is Cloud Computing.

Short answer: No.

Cloud services are applications that make data (in the blackhole called cloud) available to users.

So, “Cloud Computing” + “Cloud Services” = “Data anywhere anytime on any device”.

Why should the difference between Cloud Computing vs Services matter?
Because each is a different market and addresses different needs.
For example, Cloud Computing market is typically the IT infrastructure offered by companies using datacenters, servers, hardware and virtualization.
Cloud Services could be a simple “Photos in the Cloud” service such as Picasa and Flickr or a simple “Music in the Cloud” service such as Thumbplay and Catchmedia or “Apps in the Cloud” service such as Google Docs.

As is obvious, cloud services build off of cloud computing’s hardware etc to offer tangible benefits to customers by offering novel ways to access and consume data/applications.
Cloud Services is projected to be a $150B market by 2014 with 21.5% CAGR while Cloud Computing is to be a $14B market by 2014.
From a business perspective, Cloud Computing would need more capital outlays and capex. This obviously is a huge barrier to entry for startups and so, scale is king here. Which is why traditional big companies such as Amazon, Google, Microsoft are in the best position to offer Cloud Computing. Obviously, a combination of cloud computing and services will be offered. But, Cloud Computing as a separate market is off the table or a very difficult market for startups.
Cloud Services, on the other hand, is a ripe ground for innovation or disruption and the best ideas with good execution will be successful. All you need is an idea and some cash to pay for storage or user subscriptions to start a new cloud service to become popular and gain traction in the market.

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