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public-cloud-iconLast week IDC announced 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 2014.

[The full report - including key assumptions and forecast data for all six years, segmented by five functional categories within eight regions/countries - is available to subscribers on idc.com.]

Scorching Growth and Shifting Category Spend

In total, spending on public IT cloud services (excludes private cloud spending) will grow from $16.5 billion in 2009 – a modest, recession-driven haircut from last year’s forecast – to over $55 billion in 2014. This is scorching fast growth of 27% per year.

Worldwide Public IT Services Forecast - 2009, 2014

CLICK IMAGE to ENLARGE

In our forecast we count spending on five major categories of offerings delivered as cloud services – Applications, Application Development & Deployment (roughly corresponding to what NIST calls Platform as a Service/PaaS), Infrastructure Software (essentially, IT management apps like identity management and desktop management), Server capacity and Storage capacity. [These first three categories, together, equal IDC's definition of Software as a Service (SaaS).]

This forecast is strictly focused on IT industry offerings delivered as cloud services – thus we don’t include online gaming, web advertising, online media/entertainment or other industries’ cloud offerings.  We’ve focused on IT clouds because they are the foundation for all the other industries’ offerings.

Among these five public IT cloud services segments, cloud applications dominated in 2009, accounting for 49% of worldwide spending. This is no surprise, as the first wave of IT cloud services consisted of applications delivered via the software-as-a-service model. Infrastructure categories, such as cloud servers, cloud storage, and cloud systems infrastructure software are newer to the market, as are application development and deployment cloud offerings (also known as platform as a service). However, we forecast a less skewed distribution of spending among these segments by 2014, with applications accounting for a little over one-third of spending, and increased shares in infrastructure and AD&D/PaaS segments.

This does not mean that cloud application demand will be waning — it will still be, by far, the largest segment in 2014. It will be critically important for AD&D/PaaS players to aggressively recruit cloud ISVs in the 2010–2014 time frame, and successful cloud infrastructure players will seek out the most promising PaaS and application players as partners/customers.

Cloud Is Starting Small, But Quickly Gaining On Traditional IT

Looking at the chart below, it’s easy to see that 2009 public IT cloud services spending was modest compared with spending on traditional IT products: cloud offering spending was just 4% (1/25th) of the spending on comparable offerings delivered as traditional products. But, with cloud offerings’ rapid growth, they will gain significantly on traditional IT products — rising to 12% (1/8th) of the size of traditional product spending by 2014.

Cloud Spending Compared to Traditional IT Product Spending

CLICK IMAGE to ENLARGE

We see 2014 as a “knee in the curve” year for public IT cloud services adoption, particularly in the earlier-adopting markets of the United States and Western Europe. In these markets, we’ll see acceleration in market growth in 2014 as the investments vendors make in 2010–2013 in cloud platforms and the solution and channel ecosystems around them come together with a more educated customer base and better solutions to adoption obstacles such as security and availability. This means that those vendors that haven’t positioned aggressively for cloud in the 2010–2013 time frame will see the market move more quickly away from them in 2014 and beyond.  For more on the impact of cloud solution/application ecosystems growth on public cloud services adoption, see The Single Biggest Reason Public Clouds Will Dominate the Next Era of IT.

Growth Share – Not Spending Share – Should Drive Investment Strategies

As we’ve noted in prior forecast posts, cloud services offerings will have an oversized impact on net-new growth in the IT industry. The chart below illustrates that impact in 2014.

Public Cloud Impact on IT Growth

CLICK IMAGE to ENLARGE

While spending on public IT cloud offerings in 2014 will reach only 12% (one-eight) of the size of traditional IT product spending, it will be almost one-third of the net-new growth in IT spending. Growth-oriented IT vendors would be wise to invest in proportion to this net-new growth impact (31%), rather than cloud services’ revenue impact (12%).  As Geoffrey Moore pointed out in Crossing the Chasm (and many others have made the same point), disruptive market transitions require this “growth-share” approach.  Those who take a more conservative “invest in proportion to spending” approach typically falter badly – or completely fail – in the wake of such transitions.

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22 Responses to “IDC’s Public IT Cloud Services Forecast: New Numbers, Same Disruptive Story”

Frank,

Thank you, once again, for sharing highlights from IDC’s latest market study. I’m looking forward to reading the full report.

Would it still be true to say that most of the early-adopters are motivated by operational cost saving benefits and enabling IT staff to reallocate their time to more strategic tasks?

cheers, David

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[...] is expected to fuel a massive build out in cloud infrastructure, creating a new market projected to exceed $11 billion by the end of 2013, according to industry analysts(1). This market will feature thousands of providers of all shapes [...]

[...] is expected to fuel a massive build out in cloud infrastructure, creating a new market projected to exceed $11 billion by the end of 2013, according to industry analysts(1). This market will feature thousands of providers of all shapes [...]

[...] percent of the $55.5 Billion Dollar Cloud Market will be based on Application Delivery according to IDC (2014 estimate).  That is 85% more total spend than the next largest category (Infrastructure [...]

[...] percent of the $55.5 Billion Dollar Cloud Market will be based on Application Delivery according to IDC (2014 estimate).  That is 85% more total spend than the next largest category (Infrastructure [...]

[...] is no surprise, as the first wave of IT cloud services consisted of applications delivered via the Software-as-a-service model. Infrastructure categories, such as cloud servers, cloud storage, and cloud [...]

[...] transition to the Cloud Era is fueling a massive build out of cloud infrastructure, projected to exceed $11 billion by the end of 2014(1). This new market will feature thousands of successful clouds of all shapes and sizes, ranging [...]

[...] 業界轉型至雲世代,催生了大量的雲基建,預計到二零一四年底將總值一百一十億美元[1]。Apache軟件基金會以多個成功項目開創業界先河,如Hadoop、 Hive及 Cassandra等。這些工程項目最初都是在成功的大型雲架構中開發出來,像Facebook和Yahoo!等,繼而通過Apache牌照延展至更廣泛的用戶。這個新市場將包含數以千計不同形態、不同規模並發展成功的雲,由商業、基建及開發人員方案,到消費者、流動及遊戲服務等。Citrix 建議的Apache CloudStack項目,將讓不同規模的用戶在開放、強勁、靈活和通過了Amazon兼容驗證的平台上,以更簡易的途徑提供雲服務。 [...]

[...] 業界轉型至雲端世代,催生了大量的雲端基礎建設,預計到了2014年底將總值110億美元[1]。Apache軟體基金會以多個成功項目開創業界先河,如Hadoop、 Hive和 Cassandra等。這些工程項目最初都是在成功的大型雲端架構中開發出來,像Facebook和Yahoo!等,繼而通過Apache牌照延展至更廣泛的使用者。這個新市場將包含數以千計不同形態、不同規模並發展成功的雲端,由商業、基礎建設和開發人員方案,到消費者、流動和遊戲服務等。Citrix 建議的Apache CloudStack項目,將讓不同規模的使用者在開放、強勁、靈活和通過了Amazon兼容驗證的平台上,以更簡易的途徑提供雲端服務。 [...]

[...] Spending on public IT cloud services (excludes private cloud spending) will grow from $ 16.5 billion in 2009 to over $ 55 billion in 2014, predicts IDC. [...]

I think that software base business is the service oriented platform. So, service is the most common feature in the IT close service into the public. I also give you thank for moderating of your latest service.

Small businesses especially are contributing to the growth in cost-effective, cloud-based IT functions. Something as simple as switching from in-house email to a cloud-based solution like the one Google offers can save a 50-person SMB thousands. Too many companies pay too much for traditional IT products they use sparingly. “Good enough” is becoming better than the “deluxe” traditional IT package. “Servicizing” IT is the way to go…

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