Cloud Services Highlights
Having launched a reappraisal of Cloud Computing last week we’re kicking off by looking at the traditional Cloud services elements of SaaS, IaaS and PaaS. These are notoriously hard to size and forecast, which make them excellent subjects for market analysts of course.
In total we size the 2013 market at $68 Billion, with SaaS, IaaS and PaaS accounting for $41, $18 and $8 Billion respectively. We have seen a rapid growth of the last few years continuing, with the combined market reaching $87 Billion in 2018 (see Figure).
What Makes this Different?
Cloud Computing definitions need to deal with Internet Services (including mailbox, hosting and transit elements), IT software and IT services categories.
What makes XaaS different is the replacement of specific parts of the IT stack typically run by an end-user organisation. In this Figure we show how modern workloads can be broken into smaller parts, with all of them installed on premise and managed by the internal IT shop in a Build Your Own (BYD) environment.
- In the case of Infrastructure as a Service the equipment is provided by the supplier from an off premise data centre. Everything up to the hypervisor is supplied as a service, often using utility pricing. The user needs to supply the operating system, virtualisation, database and application elements. Amazon Web Services is the most successful example of an IaaS supplier.
- With Platform as a Service the operating system, infrastructure software and hypervisors are also supplied, leaving the user to provide just the database and applications. PaaS is often used for software development and Microsoft Azure is a good example supplier.
- In the case of Software (and Business Process) as a Service the database and application layers are also taken off premise, with the provider often charging a monthly or annual fee per year for the service. Salesforce.com is a good example of a SaaS supplier.
Cloud Computing is wider than the revenues of XaaS from providers as internal IT organisations often build their own private Clouds – typically data centres with advanced virtualisation. Public Clouds are further divided into those providing dedicated resources to each customer and those with multi-tenant services made cheaper through sharing and higher utilisation. In addition the mixture of public and private Clouds are often referred to as ‘Hybrid’.
Salesforce Leads the SaaS Market
In 2013 Salesforce.com came out top of the SaaS market with a 7.3% share (see Figure), followed by IBM, whose 100 available applications gave it a 3.8% share. Surprisingly for some perhaps the gaming companies Electronic Arts (3.4%) and Activision Blizzard (2.2%) took strong positions in the year. Microsoft (3.0%) and Oracle (2.2%) were also among the leaders.
As in most software markets there were many smaller players, accounting for 78.0% of the market revenues in 2013.
Beyond trying to work out whether we should count SaaS either in software, IT services areas or both, there is another major dilemma. Today the born-on-the-Web vendors can be differentiated by their means of delivery, but when everyone else catches up we won’t need the word ‘Cloud’ in front of the services they supply. Perhaps we should consider salesforce.com as a sales and marketing support company, eBay an auctioneer, Google and advertiser and Amazon a book seller.
Amazon Leads the IaaS/PaaS Market
Talking of Amazon… it is the clear leader in the combined IaaS/PaaS market (see Figure), taking a 9.9% share of the $27 Billion revenues generated in 2013. It was followed by Microsoft (4.0%), Google (3.7%) and IBM (3.3%). Other system suppliers Fujitsu (3.1%), Oracle (2.2%), Hitachi and HP (both 1.8%) featured as leading suppliers, as did Xerox and Ricoh from the managed print services world.
Some Conclusions – Going Through it to Get to it
At $67 Billion Cloud Services represented only 1% of the total IT and Communications market, so there’s a long way to go.
There are many advantages of Cloud services – from the lower costs of software development using PaaS, to saving data centre build-out costs using IaaS, to greater business agility of many SaaS offerings. They help Line of Businesses get involved with application development and CFOs avoid large capital spending if need be. There’s lots of heavy lifting going on today to transform large company data centres into private Clouds – not just to be able to mix and match applications, but also to become Cloud service providers themselves.
About 50% of the applications accessed via mobile phones are run on remote servers today – even with their strong current growth rates it will take decades before anything similar happens to corporate applications.
Please let me know if you agree or disagree with the sizes we show here and what sources you use to forecast this vital market.
