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By Sue Kelly
The cloud battle continues. Look at the battle of the technology
hotshots - Amazon, Google, and Microsoft as they are going up against
traditional infrastructure makers like IBM and HP as businesses move
their most important work to cloud computing, This shift is profoundly
changing how companies buy computer technology and how they manage their
data centers.
The fact that these IT players are expecting big bucks from cloud
computing is nothing new. New large cloud based business continues to
be won each day. Just take a quick look at Amazon and their cloud
product named Amazon Web Services, or AWS. The Amazon Senior VP, Jassy
heads up AWS and he points out Amazon rents out computing power for
pennies an hour. "This completely levels the playing field," Jassy
boasts.
AWS makes it possible for anyone with an Internet connection and a
credit card to access the same kind of world-class computing systems
that Amazon uses to run its $34 billion-a-year retail operation. "This
will be a very high-volume, relatively low-margin business," Jassy says.
AWS is growing like crazy although Jassy will not cite the exact
numbers. Jassy claims "hundreds of thousands of customers" already use
the service, and analysts at UBS estimate Amazon will do about $750
million of business on AWS this year.
Now back at IBM what has come to light recently and is the fact they
express amazing optimism on the future of the cloud computing market
in general and its fortunes in particular. On 8 March 2011, IBM CEO
Sam Palmisano said that he expected the company to generate $7 billion
in cloud computing revenues by 2015. He made this announcement as he
was speaking at IBM’s annual investor meeting.
What is not clear to this person is whether these are incremental
revenues for IBM or are they revenues that are classified as cloud
related and really part of the general data center management,
outsourcing, and services business of IBM looking forward a few years.
Palmisano remarked that cloud computing “is the next technical shift
in the enterprise” and that it “represents about $7 billion of
opportunity” for the company. IBM recognized the opportunity in the
field quite early, with its Blue Cloud strategy being launched in 2007.
With its portfolio of servers, software and services, all required in
cloud computing, IBM is not wrong in expecting a windfall from the
technology.
However, are its expectations a bit too optimistic? According to a
report published by market research firm In-Stat, by 2014, businesses
in the United States will spend more than $13 billion on cloud
computing and managed hosting services. Even if that spend is doubled
considering the international market, the market will be around $30
billion by 2015, and IBM is expecting a market share of 25%. Aggressive
projections but certainly achievable given IBM's track record.
With cloud entrenched players like Amazon, Google and
Salesforce.com, IBM may not find the going too easy. Swiss investment
bank UBS has predicted that Amazon Web Services will register $2.5
billion in cloud sales in 2014. Salesforce.com is the first cloud
computing superstar with its rise in prominence directly attributable
to its cloud-based offerings. Google with its Google Apps is the
company that brought cloud computing to the masses.
So IBM's ultimate goal is to achieve 25% market share. Given their
intellectual and financial capital, I would not bet against them. Would
you place your bets on IBM engineers or Amazon engineers to win the
battle? $7 billion by 2015 may be difficult, but not impossible for Big
Blue.
Cross Posted from myITview.com
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