Cloud Storage Spending to Reach $22.6 Billion by 2015

Cloud computing demand will drive new IT spending over the next five years, as public cloud service providers and the adopters of private cloud solutions invest in the supporting infrastructure, according to a recent market study by International Data Corporation (IDC). Therefore, the leading managed cloud service providers have been busy expanding their service delivery platforms.

Overall spending by public cloud service providers on storage hardware, software, and professional services will grow at a compound annual growth rate (CAGR) of 23.6 percent from 2010 to 2015, while enterprise spending on storage for the private cloud will experience a CAGR of 28.9 percent. By 2015, combined spending for public and private cloud storage will be $22.6 billion worldwide.

"Despite current economic uncertainties, IDC expects cloud service providers -- both public and private -- to be among the most expansive spenders on IT products and services as they continue to build out their facilities worldwide and expand their service options," said Richard Villars, vice president, Storage Systems & Executive Strategies at IDC.

According to the IDC assessment, the most significant driver of storage consumption over the past three years has been the emergence of public cloud-based application and infrastructure providers. Many of these service providers act as content depots -- gathering, organizing, and providing access to large quantities of digital content.

Meanwhile, other cloud-based service providers have emerged with a focus on delivering IT infrastructure and applications in an "as a service" model. Collectively these companies have undertaken massive storage buildouts as they have expanded their service offerings, entered new markets, and extended their geographic reach.

In parallel to the expansion of the public cloud, many organizations have started to deploy their own private clouds for application, compute, and archival storage. Some of these private cloud deployments -- government and research sites -- are comparable in scope and complexity to public cloud environments, while others are limited in scope.

 Five information requirements are driving storage demands:

• Enabling more efficient delivery of information/applications to Internet-based customers.
• Reducing upfront infrastructure investment levels (i.e., cutting the cost and time associated with deploying new IT and compute infrastructure).
• Minimizing internal IT infrastructure investment associated with "bursty" or unpredictable workloads.
• Lowering and/or distributing the ongoing costs associated with long-term archiving of information.
• Enabling near-continuous, real-time analysis of large volumes and wide varieties of customer-, partner-, and machine-generated data (Big Data).

To meet these diverse requirements, IDC believes that organizations will continue to demand access to low-cost storage capacity -- plus a growing range of complementary advanced data transformation, security, and analytics solutions.

"The challenge facing the storage industry will be to balance public cloud service providers' demand for low-cost hardware while boosting demand for advanced software solutions in areas such as object-based storage, automated data tiering, Big Data processing, and advanced archiving services," noted Villars.

"Big Data developments will be perhaps the most critical new marketplace for storage solutions providers in the coming decade. Providing a strong portfolio of complete Big Data solutions -- hardware, software, and implementation services -- will be a high priority to succeed. Similarly, a strong portfolio of active archival storage solutions will be a critical differentiator for private content or archive cloud deployments."

Increased Adoption of Telepresence and New Video Apps

Telepresence and other forms of advanced visual collaboration technologies are moving further into the mainstream of forward-looking business practices. This increase in adoption has been a global phenomenon, as more business leaders follow the numerous application examples of the early-adopters.

Infonetics Research released excerpts from its second quarter 2011 (2Q11) "Enterprise Telepresence and Video Conferencing" report. Their findings demonstrate the progress that's been made so far this year.

Their latest market study provides insights on market size, vendor market share, and analysis for PBX-based video phones and software, as well as dedicated video conference infrastructure and endpoints -- including immersive telepresence and software.

Forecast for Continued Double-Digit Growth

For the first 6 months of 2011, enterprise telepresence and video conferencing equipment revenue is up 24 percent year-over-year -- and according to the current Infonetics market assessment, they expect strong double-digit growth in 2011 over 2010.

"Growth will stay in double-digit territory through at least 2015, thanks to demographic and communication trends favoring video, increasing acceptance of video among users, and specific use cases like tele-learning and tele-medicine," notes Matthias Machowinski, directing analyst for enterprise networks and video at Infonetics Research.

 Enterprise Telepresence and Video Conferencing study insights include:

• The global enterprise video conferencing and telepresence equipment market jumped 21% to $683 million between the first and second quarters of 2011, setting a record high for quarterly revenue.
• Year-over-year (2Q10 to 2Q11), the market is up 34 percent.
• Cisco, the leading vendor, sequentially increased its videoconferencing and telepresence system revenue 33 percent, and now holds over half the global market share.
• Infonetics forecasts the enterprise telepresence and video conferencing equipment market to grow to $5.4 billion by 2015.
• Dedicated multi-purpose room video systems make up over half the enterprise video equipment market now and will continue to be the biggest revenue-generator among enterprise video solutions.
• Meanwhile, videophones are the fastest-growing segment of the market; they are the smallest in size.
• Regionally, the strongest demand for enterprise video equipment is coming out of North America, China, India, and Brazil.

Growing Demand for Mobile Enterprise Application Services

More capable smartphones and media tablets are now joining a variety of highly portable netbook computers that have already invaded the workplace. Many are being combined with mobile apps that tap into cloud-based productivity solutions.

According to the latest market study by ABI Research, healthcare is one of the most dynamic sectors for mobile technologies, and manufacturing is now the largest sector for mobile enterprise applications worldwide.

By 2016, manufacturing will generate approximately 23 percent of the nearly $5 billion in mobile enterprise application service revenues.

Mobile enterprise applications, also called mobile B2E applications, include dashboard apps, work flow approval apps, and line-of-business applications for both the smartphone and tablet.

ABI's mobile services practice director, Dan Shey, says, "Manufacturing beats healthcare for B2E app adoption and revenues because of its large employment worldwide and the breadth of occupations that can benefit from mobile apps."

China is also one of the biggest drivers for manufacturing B2E mobile app adoption.

Manufacturing is the second largest employer worldwide. Manufacturing also employs a wide range of occupations using B2E apps, including shipping or receiving workers, delivery drivers, management and supervisory personnel, sales, and installation and repair workers.

Moreover, China is the world’s manufacturing hub, which drives B2E app needs -- not only for Chinese manufacturers but also for companies visiting their Chinese subcontractors.

Healthcare is the top sector in B2E mobile app adoption when viewing the data at the regional level. Healthcare leads in Western Europe, the Middle East, and especially North America, where healthcare B2E adoption outpaces manufacturing by nearly five to one.

Enterprise Cloud Applications Ongoing Impact on IT

The transition to managed cloud services is having a trickle-down effect on various stakeholders in the business technology landscape. As an example, in the evolving enterprise communications market, customer premise equipment (CPE) vendors must confront imminent erosion in their installed base -- as cloud services gain traction across the public, private, and hybrid cloud domains.

According to the latest market study by ABI Research, 41 percent of all enterprise communications users -- or 386 million lines or seats -- will be on virtual infrastructure by 2016, which is posing a serious danger to the traditional CPE market.

"For CPE vendors, the cloud threat is real," says ABI senior analyst Subha Rama. "By 2016, the communications CPE market will only grow 4.3 percent, while cloud communications will grow by over 21 percent, reaching $8 billion in revenues."

Smaller vendors with point solutions will see cloud services rapidly displace their installed bases. Moreover, some large systems vendors are becoming cloud providers or key enablers of this migration.

However, according to the ABI assessment, many of the CPE solutions are simply not "cloud ready" and will see performance downgrades when virtualized.

The Top Three Forces Influencing Cloud Migration are:

1. The growing adoption of data center architectures and virtualization technologies.
2. The need to integrate multiple applications to deliver the connected experience to users across different devices, including smartphones and media tablets.
3. The promise of lower costs and increased efficiencies from standardized platforms and processes in the cloud.

Enterprises are adopting a non-linear approach to cloud migration; while certain applications undergo experimentation, others are retained on premises.

Mixed environments and hybridization are becoming the norm, especially with larger enterprises. However, the technology to manage hybrid clouds and to enable seamless movement of applications instances across different vendor clouds is in its infancy.

"Enterprise mobilization is also driving migration to the cloud," says ABI practice director Dan Shey. "Cloud applications ease application delivery for businesses that are increasingly relying on access across fixed and mobile endpoints."