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IDC’s New IT Cloud Services Forecast: 2009-2013

Posted by Frank Gens on October 5th, 2009

cloud2010Last year, we published IDC’s first forecast of IT cloud services, focusing on enterprise adoption of public cloud services in five big IT categories through 2012. For the past several months, dozens of IDC analysts have collaborated to refine, deepen and extend our cloud services forecasts. In this post, we share this year’s update of our top-level cloud services forecast, now extended through 2013. [The full forecast, including 2008 as well as 2010-2012, will be published shortly in IDC's Cloud Services: Global Overview subscription program.]

The New Forecast

Here is the new forecast, segmented by offering category, for 2009 and 2013:

ww_IT_cloud_services_forecast_2009-thumb

CLICK IMAGE to ENLARGE

These figures represent revenues for offerings delivered via the cloud services model in five major enterprise IT segments (as defined in IDC’s IT market taxonomies): Application Software, Application Development and Deployment Software, Systems Infrastructure Software, and Server and Disk Storage capacity. These figures do not include spending for private cloud deployments; they look only at public IT cloud services offerings.

The revised figures are still in the same ballpark as last year’s forecast, although they reflect The five year growth outlook remains strong, with a five-year annual growth rate of 26% – over six times the rate of traditional IT offerings.about a six month revenue knock-back from what would have been expected from last year’s forecast, due largely to the global recession and, to a lesser degree, to better market tracking and tightened definitions.

The five year growth outlook remains strong, with a five-year annual growth rate of 26% – over six times the rate of traditional IT offerings. In spite of the challenging economy – or more accurately, because of it – this growth rate advantage expanded from last year’s forecast, in which cloud services were forecast to grow at over five times traditional offerings.

Cloud Services’ Impact on the IT Market: It’s About the Growth

What does this forecast tell us about the real impact of the cloud model on the IT market? Should we think of $17B in 2009 and $44B in 2013 as big or small? How important – financially, and strategically – are IT cloud services for the industry? Here are two ways to look at it.

One way is to look at the percentage of revenue that cloud offerings comprise of these five segments overall:

cloud_as_pct_IT_market_2009-thumbCLICK IMAGE to ENLARGE

This year, cloud services will total only about 5% of IT revenue. Even with a compound annual growth rate of 26% – over six times that of traditional IT – they will account for just 10% in 2013. Some might look at this, and conclude that cloud services are not very important – after all, in 2013, 90% of IT will NOT be from public clouds.

But, as we noted in last year’s forecast post, this “percent of total revenue” perspective is a very dangerous one. Why? Because it’s a rear-view mirror view: it misses the impact that cloud services offerings will have on net new growth in the IT market. Here is an analysis of net new IT growth in 2013, separated into growth from cloud services vs. growth from traditional IT products:

IT_Cloud_growth_impact_2009-thumb

CLICK IMAGE to ENLARGE

Looked at through a growth-oriented lens, cloud services will certainly have a major impact on the IT market over the forecast’s time frame. Of the $27 billion in net new IT revenue in 2013, 27% will come from IT cloud services. Given the 6X growth advantage of cloud services offerings over traditional ones, that percentage will grow very quickly in subsequent years – meaning that suppliers who don’t position themselves as IT cloud services leaders over the next several years, will forfeit larger and larger portions of the highest-growth markets.Looked at through a growth-oriented lens, cloud services will certainly have a major impact on the IT market.

As we noted last year, IT cloud services adoption is currently in the “crossing the chasm” stage.  This revenue and growth data is very much in sync with this view. As Geoffrey Moore pointed out, in this period, total revenues are small, but – as the market is on the steep part of the adoption curve – growth is extremely high. The lesson of past technology adoption waves is that suppliers who wait to position themselves until revenues get big (e.g., greater than 10%), are too late, and find themselves edged out of the all-important mainstream adoption phase.

23 Responses to “IDC’s New IT Cloud Services Forecast: 2009-2013”

[...] likes the Cloud Read this http://blogs.idc.com/ie/?p=543. The CAGR works out to over 26%. This represents significant growth to say the least. The hype [...]

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[...] 2, 2010 in Uncategorized Source: http://blogs.idc.com/ie/?p=543 [...]

Thanks for this post Frank.

One question though. Cloud computing is quite frequently split in IaaS, PaaS, Saas categories. Yet, IDC’s market sizing takes a coherent but different approach which makes discussions and comparisons quite difficult.

While it is pretty obvious that things like Servers would go in the IaaS category, it is much less obvious what would go in the PaaS category? Infrastructure software for example could be both seen as part of IaaS (virtualization layer) or as part of PaaS (middleware).

When you decided to use that splitting, did you have some XaaS-mapping in mind?

Thanks. Cheers,

Sacha

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[...] data from IDC’s Cloud Services Forecast shows that cloud services will outpace traditional IT spending over the [...]

[...] availability of our new forecast for public IT Cloud services spending.  The new forecast replaces last October’s forecast. In this post, I’ll share some highlights of the new forecast, which extends to [...]

i like this blog and you have nice post………
Best regard,
Rasal

Is there a way to estimate the size of Machine Images or Virtual Appliances out of IaaS?

Thanks
Eitan

[...] Recent IDC research shows that worldwide spending on cloud services will grow almost threefold, reaching $44.2 billion by 2013. And a recent Gartner report predicts that the volume of enterprise data overall will increase by a phenomenal 650% over the next five years. [...]

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