The Future of Cloud Computing: $127 Billion Market By 2018 [REPORT]

Cloud-computing-market-2018

A lot has been written or spoken about in regards to cloud computing market and its growth over the last few years. The subject has become an enigma and can be seen to perplex even those most technically minded individuals.

The subject has even made it to the big screen in recent times. Jason Segel’s character Jay Hargrove explained that nobody understands the cloud in a recent release from Columbia Pictures, where some rather personal material of him and his on-screen wife Cameron Diaz fell into the wrong hands.

From the first cloud-based companies such as Flycast radio and Keynote presentations in the late 90’s, everything from storage of photos and social media to storing of inventory and point of sale is managed through a cloud-based system nowadays.

The cloud is essentially several servers, some networking hardware and pieces of software connected to the internet. We then utilize this when it comes to saving, organizing and collecting our data, as it’s more powerful than anything our own computers could ever handle.

Despite this, companies and its possible consumers still regard security as a pitfall for cloud computing and in truth it is purely dependent on the chosen provider, in regards to the experience you receive. However, a survey by RapidScale showed that 94% of businesses saw an improvement in security after switching to the cloud.

This is due to many factors including lower capital expenditures, smarter usage, and increased capacity. Growing technological developments such as disaster recovery are also pivotal to the future of cloud computing. The same report by RapidScale suggested that 43% of companies that experience a disaster never reopen, which has led to more than 50% of ‘cloud using organization’ transferring their most precious material to secure, isolated data centers.

The Cloud Computing Market

In a recent presentation based on the report, titled State of the Cloud Computing 2015, from Bessemer Venture Partners’s Byron Deeter showed that the cloud computing market is growing at a 22.8% compound annual growth rate, and will reach $127.5 billion in 2018. There are now 28 private cloud $1.5 billion+ business’, with market leaders Dropbox being valued at an estimated $15 billion.

The 300 up and coming privately held cloud companies looking to reach that prestigious elite which were mentioned in BVP’s Cloudscape are able to benefit exponentially from higher availability, increased geographic reach and improved business continuity because of the cloud.

The report also claims that by 2018, 62% of all CRM  software will be cloud-based, Salesforce will leverage on cloud the most and strengthen its market leader position. 30% of all application spending is for SaaS-based applications, projected to grow at a CAGR of 17.6%  from 2013 to 2018.

CRM cloud revenue

The impact of mobility on the cloud-computing market is all time high. Enterprise mobile having more potential to monetise than consumer mobile. Think about this, 80% of employees don’t work on desktop and the majority of internet consumption is from mobile devices. With nearly 3.6 billion smartphone users by the end of 2014, the global penetration of smartphone has already crossed 50%. The growth of mobile internet in developing countries, including the big two – China & India, has been phenomenal in the last two years.

According to the BVP’s report, 43% of enterprise apps make more than $10,000 a month, compared to only 19% of consumer apps. The revenue from the majority of consumer apps, 50%, clocks between $1 and $1000 as revenue from monetization per month.

mobile monetisaion revenue

The Future – Bandwidth, Alternatives & Mobile

So how does the future look? It didn’t look so good to Oracle CEO Larry Ellison. Pay attention to his infamous statement he gave in  2009, now infamously said:

“Oh, I am going to access data on a server on the Internet.’ That is cloud computing?…Maybe I’m an idiot, but I have no idea what anyone is talking about. What is it? It’s complete gibberish. It’s insane. When is this idiocy going to stop?”.

Despite Ellison’s open concern there are some tangible threats such as bandwidth demands, which will only intensify as cloud usage increases. This has led to the FCC establishing usage guidelines for the internet, given priority to low latency data, or building a possible fast and slow lane for broadband. This has led to the argument though that shouldn’t the internet be shared equally?

There have been alternatives to combat this though known as ‘Inverse cloud models’ also called machine-to-machine computing. Dell recently reported in their article “Demystifying the Cloud” that companies have been coming up with their own branded versions. Major technology companies Cisco and IBM have “The Fog” and “Edge computing” respectively.

The benefits of machine-to-machine computing over cloud-based is that it can “distribute some data transmission among routers and endpoints, rather than sending them to a server and back”. Meaning that the data doesn’t have to travel as far, resulting in the process being a lot quicker.

This could be a topic of significant interest as Forbes recently reported that the number of devices connected to the internet will more than double from the current level, with 40.9 billion forecasted for 2020.

In regards to security, as mentioned earlier, it depends mostly on the provider, David Linthicum, a cloud computing visionary who has authored 13 books on computing, believes the market convergence lies with Google, AWS and Microsoft. Which he says is as “easy to call as the sunset”.

Deeter, who we mentioned earlier believes the impact of mobile, will be significant in regards to enterprise business apps. It’s worth noting that 85% of enterprise B2B workers have access to a smartphone and that there are many different reports suggesting now that internet usage has tipped the scale from desktop to mobile.

This is in conjunction with the number of enterprise apps increasing by over 210% in 2014. Over half of the enterprise apps available tend to make more than £10k a month than consumer apps. It’s  evident then that enterprise mobile apps will continue to have a significant impact and Deeter’s closing piece is to “become great on mobile, or your next challenger will”.

Scott McNealy, former CEO of Sun Microsystems, perfectly summed up the impact that cloud computing will have “It has security, directory, identity, privacy, storage, compute, the whole Web services stack”.

Computer Weekly announced last year that Coca-Cola soon plan to run their mission-critical ERP systems in a private cloud. CIO Onyeka Nchege predicts that in the next five years the company would be using a lot of public cloud services, and move away from current private cloud strategy. This strategy is one that Linthicum believes will become the norm.

“We’ll see the continued fall of the private cloud-only implementation. Public clouds will be paired with private clouds to form hybrid or multiclouds, which provide enterprises with more cost efficiency and scalability”, he added.

With a greater knowledge and understanding over time, the hope is that people’s misconceptions of cloud computing will vanish. But if they do, it will be interesting to see how demand is handled in regards to bandwidth and alternative options.

Author: Richard Protheroe is a content marketer for Veeqo who supply cloud-based inventory management software for retailers selling on multi-channel platforms such as eBay, Amazon, Shopify and Woocommerce.

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