Boiling Pot

Race To The Cloud Heats Up

Boiling PotIt’s no longer a question of if the cloud or even when. Increasingly, it’s about how fast do I move to the cloud, and which parts of the business do I move. According to a new survey from RightScale, 94% of respondents said they had cloud adoption of some kind going on. People are quickly moving past what it calls the Cloud Watcher stage — people just making plans for cloud use — and are embarking on their first cloud projects (Cloud Beginners), running apps (Cloud Explorers), or relying heavily on cloud (Cloud Focused).

Last year, cloud computing rang up close to $50 billion, a number expected to more than double by 2017. At a compound annual growth rate of 23.5%, it’s growing five times faster than the broader technology market.

“The future of the cloud is about the Internet of Things,” said IDC Vice President of data center and cloud Rick Villars. “[The cloud] is the foundation on which the IoT gets delivered. You have to have the data center and the cloud before you can deliver the services.”

He also recommends taking an “asset management” approach to evaluating cloud services, with a mix of liquid (i.e. that can be outsourced to a cloud provider to take advantage of a service provider’s scale and infrastructure) and fixed (i.e. regulated data, or legacy mission-critical applications) IT assets. “For CIOs, it’s time to evaluate what parts of my system are fixed and which parts you are able to get on demand,” he said. The fewer IT resources a business has to run itself, the more efficient it will become and the larger the cloud computing industry will grow.”

The bigger vendors like Amazon, Microsoft, Google, and IBM are engaged in a vicious cloud price war were frequent and deep discounts — ranging from 32% to 85% — are the norm. Last year the four leading public cloud providers — AWS, Rackspace, Google Compute Engine, and Azure — rolled out 25 price reductions across compute, storage, and networking, up from 22 price reductions in 2012, according to RightScale.

The race to the bottom for cloud pricing represents an interesting paradox, said Sharon Wagner, Cloudyn CEO. “When the cost per unit goes down, consumption goes up. That’s what cloud vendors are relying on.”

Not satisfied with being the biggest network enabler of the cloud, Cisco just announced it will be investing $1 billion over the next two years to enter the cloud services market. “Companies are looking for different ways to get IT done,” said Rob Lloyd, Cisco president of development and sales. “Everybody is realizing the cloud can be a vehicle for achieving better economics [and] lower cost.”

SAP is going all in on the cloud because that’s what customers want, with revenue from traditional purchased software inching up 3% last year, while revenue from online software and related services jumped 53%. “It’s very, very clear that a cloud offering as a subscription is what customers want,” said Steve Lucas, SAP’s president of platform solutions.

This is the 50th anniversary of IBM’s first mainframe, and while Big Blue has successfully managed to keep it relevant as a really big server for more than 3,200 organizations, — including 92 of the top 100 banks, 23 of the world’s top 25 retailers, all 10 of the top insurers and more than 225 state and local governments worldwide – it’s also jumping on the cloud bandwagon. The first System z-based integrated system offering, the IBM Enterprise Cloud System is an all-in-one system that can cost up to 55% less than a comparable x86-based cloud infrastructure.

For most organizations, the bottom line IS the bottom line, and the cloud is proving to be a really good way of improving it. Throw in agility, scalability and speed and it’s no wonder that everybody is going cloud.

Image credit: Amy Riddle (flickr) / CC-BY-ND

About the author
Steve Wexler

Steve is a proficient IT journalist, editor, publisher, and marketing communications professional. For the past two-plus decades, he has worked for the world’s leading high-technology publishers. Currently a contributor to Network Computing, Steve has served as editor and reporter for the Canadian affiliates of IDG and CMP, as well as Ziff Davis and UBM in the U.S. His strong knowledge of computers and networking technology complement his understanding of what’s important to the builders, sellers and buyers of IT products and services.