Cloud computing

Cloud computing is the largest Internet market, and continues to enjoy a very sunny outlook. It lends vital support to businesses, and especially to the digital transformation of small businesses. The cloud computing market today is locked in a race for size, and Amazon has a solid lead over the rest.

Still incredible growth in this now mature market

The public cloud computing market will be worth 109 billion EUR in 2018, and is forecast to reach close to 165 billion EUR in 2021, with average annual growth in excess of 15% (i.e. more than most OTT markets). Growth will remain very high as steadily decreasing unit prices make it possible to attract new customers, especially small and medium businesses. Software publishers’ shift to SaaS models (some now only sell cloud-based versions of their software) is helping to accelerate the transition. At the same time, while the private cloud is developing slowly, hybrid cloud solutions, which combine the advantages of the public and private clouds, is also thriving.

A smaller number of rivals

In the public cloud market, Amazon’s bet of investing massively before anyone else – initially for its own in-house purposes – has paid off. Despite a very aggressive pricing policy, Amazon is capitalising on volume, and reporting very solid profit levels (which account for the bulk of its margins). Its chief competitors are fellow Internet and IT heavyweights: Microsoft, IBM, Google (especially for IaaS) and Salesforce (especially for SaaS) and, more recently, Alibaba. However Amazon alone outweighs all the others combined. In the hybrid/private cloud market, with massive volumes involving huge accounts, IBM is by far the leader. Its main challengers are Amazon, Rackspace, NTT and all of the IT providers that are steadily adopting their solutions.

Rate of cloud innovation still accelerating

Technological innovations are making it possible to take virtualisation even further (containers and software such as Docker that makes it possible to virtualise down to the OS and applications layers, beyond virtual machines), which remains a guiding principle for the cloud (pooling resources) to be able to achieve low unit cost and on-demand computing resources. This helps lower the entry barrier for companies with little IT equipment, and for complex projects.

One of the rare services with major local considerations

Where data are located and stored remains a major issue for a great many clients. But, as with consumers, the price advantage is so significant that a migration to the cloud now seems inexorable, except for highly sensitive data. On the other hand, (physical) security and telecoms system performance (QoS, latency) are crucial, which explains current datacentre deployment strategies (both national and international) and requiring better development of network infrastructure (speed, redundancy).

North America by far the biggest cloud user
Cloud growing much faster than most OTT services