Every analyst firm worth its salt has predicted strong growth in the cloud computing space, and hardly a day goes by that somebody doesn’t write an article about its enormous potential and the millions of pounds that are being spent.
The fact that the cloud market is growing isn’t news—but, the fact that this growth is a harbinger of a new business paradigm and a brand new tech bubble, is.
A Grail Research report shows cloud computing growing at double digit rates over the next five years, led by the SaaS delivery model. Cloud growth from USD37.8 billion in 2010, moving to USD121.1 billion in 2015—and this during what could at best be described as a “challenged” economy. This is precisely why I’ve coined the phrase “dotcloud boom”—a phenomenon upon which we are on the very cusp. This particular tech bubble that is currently facing us will differ substantially from the last, however. Precisely because of the underlying cloud technology upon which new companies can build, it is easier than ever to launch a viable company with very little capital—or even no capital at all. At least part of the next wave of cloud entrepreneurs are very likely to cut the venture capitalists out of the loop. While that venture money will certainly be necessary for those who are actually creating the cloud-based data centres that deliver services, entrepreneurs who create and sell those services delivered via those cloud-based data centres won’t need nearly the same level of capital as their dotcom boom predecessors.
[ Cloud computing has fuelled renewed interest in outsourcing, resulting in enterprises reassessing their IT service sourcing strategies. The Cloud, Managed Hosting, Colo or In-house? complimentary research outlines some interesting considerations when deciding on data centre services. ]
Venture capitalists understand very well that the next wave of technology investment is going to involve the cloud. The software business of course, continues to show strength, but where is that strength located? By next year, 85 percent of new software firms are going to build their delivery model around the cloud. Off-the-shelf, shrink-wrapped software boxes may not be obsolete, but they are most assuredly being rendered redundant and superfluous by this new delivery model. And it’s just part of an ongoing evolution. In the ’90s, software companies like Egghead made quite a lot of profit by selling shrink-wrapped software in a retail setting, but they were rendered obsolete when vendors started selling software by direct download. Now even that model is being replaced by the cloud, and the download itself is no longer necessary.
Another interesting phenomenon is the fact that cloud computing and globalisation go hand-in-hand, and in fact, feed on each other. Globalisation trends and outsourcing would not exist were it not for the enabling technology of the cloud; and the cloud’s maturity and strength is fed by the increasing demand for outsourcing solutions. The growth in cloud will continue to mirror trends in globalisation and outsourcing, with India leading the market for demand for cloud services. The West no longer has a stranglehold over capitalism and innovation; the cloud is the final piece of the puzzle in exporting that concept to the world. Naturally, as part of the package we’ll have to accept that the growth that we’ve heretofore held so closely will be democratised, and more innovators in more locations around the world will be able to have a seat at the table. And that’s not such a bad thing.
Dan Blacharski is the author several books on technology, finance, and business. He has been a freelance writer and editorial consultant for over 15 years and currently covers high-tech topics.
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