Cloud Computing Set to Slowly Scale Slope

Cloud SlopeUnlike more recent inductees into Gartner’s Hype Cycle for Emerging Technologies such as the ‘Internet of Things’which is is still mired atop Gartner’s Peak of Inflated Expectations —  cloud computing has almost bottomed out in the Trough of Disillusionment. In fact, cloud currently appears set to scale Gartner’s Slope of Enlightenment. But while there is some serious money being devoted to the cloud, it appears most of it is coming from the vendors and service providers.

The central theme of the 20th anniversary of the Hype Cycle is Digital Business, said Hung LeHong, vice president, and Gartner fellow. “Understanding where your enterprise is on this journey and where you need to go will not only determine the amount of change expected for your enterprise but also map out which combination of technologies support your progression.”

According to Gartner, Digital Business is the fifth stage of the Digital Business Development Path, which began with Analog, Web, E-Business, and Digital Marketing, and ends with Autonomous. “Autonomous” focuses on the convergence of people, business, and things, with the Internet of Things and the concept of blurring the physical and virtual worlds strong concepts in this stage.

Businesses say cloud is their number-one networking initiative, but despite the analysts’ bullish projections and vendors frenetic efforts, cloud spending has yet to really take off. IDC predicted cloud spending would surge 25% to more than $100 billion in 2014.

Spending in excess of $100 billion and 25% growth are impressive, but still only a minute fraction of the $2.1 trillion ($3.7 trillion when you throw in telecom services) that will be lavished on IT this year. IHS painted a slightly more optimistic picture, forecasting that cloud-related spending would reach $174.2 billion this year – and $235.1 billion by 2017 – but still, a relative drop in the IT bucket.

In fact, if you take the mega-enterprises out of the equation, the cloud parade looks a lot smaller than the hype would suggest. I found it interesting that Amazon is adding daily enough servers and other gear to power the $7-billion of 2004. Take away the soaring cloud budgets of Google, Facebook, IBM, HP, Cisco and Microsoft and just how much is left for everybody else?

From the vendor perspective, IBM, HP, Cisco, and AT&T are the preferred infrastructure-as-a-service (IaaS) providers, topping the likes of Amazon Web Services, Microsoft, or Rackspace. Another IDC report, on cloud professional services for 2014, positioned four vendors – Accenture, HCL, IBM, and PwC – in the Leaders category, with several others recognized as Major Players, including Cognizant, Wipro, Infosys, Microsoft, EMC, Cisco, Capgemini, NTT DATA, Unisys, and HP.

In an effort to make cloud computing more attractive to a broader audience (at least the cost-conscious segment), service providers like Amazon, Microsoft, Google, and IBM have been indulging in a vicious price war. In 2013 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, and the race to the bottom has continued in 2014. In March, Google slashed prices by between 30% and 85% on cloud services, followed by AWS — which cut some prices by up to 65% — and Microsoft.

With the hardware costs for cloud providers dropping by up to 30% a year, these price cuts are expected to continue for some time. “We’ve not gotten to the bottom of the curve yet,” says John Dinsdale of Synergy Research Group, which tracks cloud companies.

Costs are only one of the three Cs of cloud management, according to BMC’s Monica Brink, Senior Solutions Marketing Manager. The other two emerging cloud management requirements are Choice and Compliance. Until all three are addressed appropriately, it looks like cloud adoption will continue to limp along at just double-digit growth rates.

Image credit: Marsel Minga ( / CC-BY