Gartner: Global Cloud Services Market Over $68B in 2010

By Doug Allen

Analyst group Gartner has released a report that predicts the global cloud services market will surpass $68 billion by the end of the year. Thats a 16.6 percent jump from last years revenue of $58.6 billion, but nothing compared to the grand sum of $148.8 billion expected by 2014. These numbers run even higher than another consultancys, IDC, which pegged global revenues to hit $55.5 billion by 2014, although any direct comparison of these figures is meaningless without a common set of data and research assumptions.

The main growth markets over the next five years will be software as a service, platform, and infrastructure as a service, which will combine for a total of $112 billion cumulatively. Gartner credits this explosive growth in cloud computing and services to increased customer awareness, especially among the enterprise, and a corresponding spike in technology providers eager to seize the market opportunity.

We are seeing an acceleration of adoption of cloud computing and cloud services among enterprises and an explosion of supply-side activity as technology providers maneuver to exploit the growing commercial opportunity, aid Ben Pring, research vice president at Gartner. The scale of application deployments is growing; multithousand-seat deals are increasingly common. IT managers are thinking strategically about cloud service deployments; more-progressive enterprises are thinking through what their IT operations will look like in a world of increasing cloud service leverage. This was highly unusual a year ago.”

The report also picked out shifts in customer adoption rates by country or region. Though the U.S. accounted for 60 percent of the total cloud services market in 2009, that number will drop to 58 percent by year-end, and down to 50 percent by 2014, as other geographic markets step up their own deployments, echoing similar findings from IDC. To make the point, Western Europe is on course to account for about 23.8 percent of the global market by the end of the year, but should grow to 29 percent by 2014, while Japan will jump from 10 percent to 12 percent over the same period.

After many years of germination, most notably in the SaaS arena, the core ideas at the heart of cloud computing such as pay for use, multi-tenancy and external services appear to be resonating more strongly, Pring continued. In part, this can be explained by macroeconomic factors. The financial turbulence of the last 18 months has meant every organization has been scrutinizing every expenditure. An IT solution that can deliver functionality less expensively and with more agility (remembering that time is money) is hard to ignore against this backdrop.

Vertical markets such as the financial services and manufacturing industries are leading the charge in deploying cloud services. The communications and high-tech fields arent far behind, and the public sector is giving these solutions a long look too. However, as with most cloud services studies, there is the inevitable caveat that major concerns remain, especially among enterprises, about the cloud security, availability of service, vendor viability and overall maturity of these solutions.

Many enterprises may be examining cloud computing and cloud services, but are far from convinced that it is appropriate for their requirements, he said. We expect that this will be a significant opportunity for existing IT services players to evolve their current offerings such as outsourcing, system integration, development, etc. to become cloud-enabled and try to combine the best of the two worlds, namely traditional IT services and cloud computing.