Archive for January, 2012

The Cloud in 2012

Wednesday, January 4th, 2012

I’ve just read Randy Bias’ post on cloudscaling.com – thought provoking and interesting reading to be sure, but I’m not sure I agree with him.

Why?

Let’s put things into perspective. Amazon Web Services is clearly a fast-growing business and an admirable example of organic innovation. However, if you look at the total IT DC market, it’s about 300BUSD in 2011, of which 25% is related to cloud computing – meaning AWS has captured roughly 1,3% of the total cloud market. Is that significant? Hardly. Is Amazon making money on AWS? Hard to tell, as no details are disclosed – but probably margins are razor thin. Here’s another piece of information: public IaaS market was about 2.3BUSD in 2011, so Amazon captured about 40% of it which makes them the market leader, but other providers, like AT&T, Verizon and so on are not that far behind. Besides there are strong proof points that Amazon is actually not that cheap & efficient – I’m aware of successful private cloud installations coming in at 40% lower cost / VM than Amazon’s equivalent offering (it’s managed as a business, so it takes server replacement, OPEX costs etc into account).

There’s a piece of information hidden behind those figures: the private cloud market is a huge business – perhaps over 50BUSD already last year. Ignoring this market is a mistake few companies can afford without being severely punished. The enterprise market is ripe for “cloudification” and not just for virtualizing existing application or cost savings; there’s a significant demand from enterprises for native cloud applications that scale infinitely; unified management of all aspects of IT – including networks – has been a key requirement even before clouds. Don’t get carried away by a 1BUSD market, when the real iceberg – 50 times bigger – lies under the sea.

So, what’s my prediction for 2012?

I think vanilla, remote IaaS providers like Amazon will see a slowing growth, at least in comparison with premium service public IaaS, private clouds and PaaS and SaaS offerings. I think 2012 will be the year of the emergence of the personalized, localized and highly available (read: five nines) cloud, with radically improved network performance, targeting enterprise customers. We will see PaaS and SaaS clouds skyrocket: most private customers don’t want Amazon’s EC2 service – they want simple, convenient services such as Dropbox, iCloud, Google Docs etc. This is the future of cloud computing, not bare bone IaaS that just moves your PCs to the cloud with unreliable performance and connectivity.

Let’s check it again in 362 days 😉