Volume 21, Number 41 -- November 12, 2012

Cloud Services Revenue To Reach $43.2 Billion In 2016

Published: November 12, 2012

by Jenny Thomas

It will come as no shock to IT Jungle readers that cloud computing is no longer a distant trend on the horizon. We have been forecasting the push toward cloud computing for years, and more recently we have been reporting on the growing number of IBM i solution providers that are introducing cloud services.

For a platform that is often wrongly accused of being behind the times, the IBM i platform looks to be staying in pace with other similar platforms when it comes to the move to the cloud. Still, it doesn't hurt to be informed as to where the clouds are clustering, and a recent report from IDC sheds some light on which markets are clouding up fastest.

A new report from IDC, entitled U.S. Public IT Cloud Service by Industry Sector, focuses specifically on public cloud services that are shared among unrelated enterprises and consumers, open to a largely unrestricted universe of potential users, and designed for a market, not a single enterprise.

IDC identified three markets that accounted for more than 50 percent of cloud spending in 2011: professional services, discrete manufacturing, and process manufacturing. According to Eileen Smith, program manager in IDC's global technology and industry research organization, this was not a surprising finding as these industries are typically considered less risky and have less compliance issues to deal with.

To identify these markets, IDC analysts examined data from last year, finding that services and distribution, the largest sector, accounted for 30.3 percent of total revenue in 2011. Professional services alone accounted for nearly 40 percent of the entire category in 2011.

Manufacturing and resources was the second largest vertical sector, accounting for 24 percent of total public IT cloud services in 2011. Discrete manufacturing accounted for 46.7 percent of that 2011 total in the manufacturing and resources market.

IDC also found that infrastructure was the fastest growing sector within cloud computing, accounting for 12.3 percent of spending in 2011, and analysts predict that percentage will creep up to 12.9 percent of spending by 2016.

In addition to the larger markets, the IDC report identifies six vertical sectors where cloud computing is gaining a stronghold:

  1. Financial Services: banking, insurance, and securities and investment services
  2. Manufacturing and Resources: process and discrete manufacturing, construction, and natural resources
  3. Services and Distribution: retail, wholesale, professional services, consumer and recreational services, and transportation
  4. Infrastructure services: communications and media, and utilities
  5. Public sector: government, education, and healthcare
  6. Home Business and Consumer

IDC also predicts five primary market cloud services that are most likely to be in demand, to include:

  1. Applications as a Service
  2. System Infrastructure Software as a Service (SaaS)
  3. Platform as a Service (PaaS)
  4. Server as a service
  5. Basic storage as a service

Insight into all these trends and predictions is great for solution providers looking to expand their offerings, but it's when the talk turns to cold, hard cash that we can see how enormous this expanding cloud computing market can be. The IDC report forecasts U.S. public IT cloud services will experience a compound annual growth rate of 18.5 percent over the forecast period, from $18.5 billion in 2011 to $43.2 billion in 2016. Even a sliver of that potential pie would be big business for IBM i vendors.

And the IDC experts believe the potential for more growth is very hot. "Communications and media, education, and construction were found to be the fastest growing verticals," Smith said. "We expect the media portion of the communications and media vertical to continue to be one of the main users of storage on demand to enable continuous service for content-heavy customer offerings."

For the immediate future, it looks like the sky is the limit for cloud computing.

The complete IDC report is available for purchase here.


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Editor: Timothy Prickett Morgan
Contributing Editors: Dan Burger, Joe Hertvik, Victor Rozek,
Jenny Thomas, Hesh Wiener, Alex Woodie
Publisher and Advertising Director: Jenny Thomas
Advertising Sales Representative: Kim Reed
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