In-Depth

Sizing up the Hype and Substance of Cloud Computing

A new study underscores cloud computing's momentum and helps put the phenomenon into perspective.

• By Stephen Swoyer
• 08/17/2010

Demand for cloud computing products and services will generate nearly $6.5 billion in server hardware spending by 2014. That's almost double 2009's tally.

That's just one nugget from a new IDC study, Worldwide Enterprise Server Cloud Computing 2010-2014 Forecast. The report both underscores cloud's momentum and helps put the cloud phenomenon into perspective.

Although cloud-generated hardware sales will grow at a double-digit annual rate, they'll only account for a fraction of overall server revenues by 2014. To put it another way, by 2014, the total annual value of server hardware revenues generated by both public and private cloud computing efforts still won't surpass IDC's Q1, 2010 tally for server revenues. That's the tally for one fiscal quarter of one year outstripping the tally for an entire year.

The double-edged upshot, according to IDC researchers, is that enterprise buyers have important questions about cloud computing -- and that (for this and other reasons) conventional server resources won't go away anytime soon.

For cloud computing to really break through, vendors will need to be able to provide the right answers. "Many IT decision makers are seriously considering cloud computing as a way to dramatically simplify their sprawling virtual and physical infrastructure," said IDC research analyst Katherine Broderick, in a prepared release. "However, there is still some lingering apprehension over issues [such as] integration, availability, security, and costs. These concerns, and how they are addressed by IT vendors, will continue to guide the adoption of cloud computing over the next several years."

Over the next four years, IDC expects that these questions will mostly be addressed, so that enterprise buyers will ultimately opt -- overwhelmingly -- for private cloud deployments. In fact, IDC expects that the share of server hardware sales generated by public cloud activity will increase by slightly less than 25 percent over the next four years; during the same period, server hardware sales generated by private cloud activity will more than double, from $2.6 billion to $5.7 billion. That's a growth spurt of 120 percent.

In addition, nearly half (44 percent) of respondents in a separate IDC survey said that they're considering private cloud efforts.

Not surprisingly, IDC concludes, public cloud services will have less of an enterprise focus -- e.g., they'll provide fewer enterprise-oriented services, particularly with respect to integration or availability -- than will private clouds.