Gartner also reported that SaaS vendors raked in $9.2 billion in 2010, up 15.7 percent from 2009 revenue of $7.9 billion. The research firm believes the SaaS market will get even stronger in 2011, growing to $10.7 billion worldwide, a 16.2 percent increase from 2010 revenue.
Taking a look at a few major cloud/SaaS players, Salesforce.com saw its revenue nearly double in 2010 to $2 billion. UBS estimates that Amazon Web Services will earn $500 million by the end of the year, while one-time cloud skeptic, Oracle, gave in and embraced the cloud this year.
Both Microsoft and Google continue to invest heavily in cloud computing, although earnings estimates for their cloud efforts aren’t currently available.
All in all, not bad during the worst recession since the Thirties.
I’m not going out on a limb by predicting that 2011 will be even better than 2010, which itself has been a year referred to as “the year of the cloud.” Of course predicting that the cloud sector will expand is easy. Here, though, are five more granular cloud computing predictions for 2011.
1) The rise of cloud computing and smartphones threatens the PC.
This is purely anecdotal, but watching a full slate of football games this past Sunday, I’d estimate that for every PC ad I saw a dozen ads for smartphones and four or five for tablets. No one is excited about new PCs anymore.
According to Morgan Stanley analyst Mary Meeker, dubbed the “Queen of the Net” by Barron’s,
mobile Internet traffic will overtake fixed Internet traffic in the next couple of years.
Much of what will drive mobile Internet traffic is the single-purpose app. You won’t first go to a browser to look for nearby restaurants on Yelp, to check sports scores or stocks or to navigate via Google Maps. You’ll use an app that will leverage the cloud to deliver a computing experience previously unavailable on constrained devices.
The cloud and post-PC devices will begin to change enterprise computing too.
“Today, 90 percent of individuals are accessing their computing infrastructure via PCs and 10 percent are accessing via a widely dispersed combination of virtual desktops, cloud PCs, zero clients and more. In less than 10 years, I expect that ratio to be reversed,” said Jeff McNaught, Chief Marketing and Strategy Officer for Wyse, a provider of cloud client computing solutions.
McNaught points out that the last few years have seen several shifts in what is the hot, must-have consumer device of the moment, but there is one constant: none of them have been PCs. A few years ago the GPS was all the rage, followed by the iPhone and Android. Everyone was buzzing about the importance of netbooks in 2009 and tablets, particularly the iPad, in 2010.
“Businesses and consumers have more choice than ever regarding how they access and manage their computing infrastructure. This choice is a direct result of a new generation of end point devices, and infrastructure advances in virtualization, cloud computing, and networking,” McNaught said.
The PC isn’t going to disappear, but its status as the go-to computing device for consumers and businesses is under siege.
2) Connected devices stress networks and network management.
The age of the PC might be in its final days, but our network infrastructure isn’t ready for an era where everything from TVs to game consoles to thermostats to coffee makers is Internet-enabled.
“As we look out to 2011 and beyond, an even larger cloud is starting to appear on the horizon, and that is the cloud made up of the explosive growth of mobile phones, devices, and sensors all connected to the Internet,” said Lew Tucker, VP and CTO, Cloud Computing, Cisco. “Often called the ‘Internet of things,’ this growth in the number of connected devices will certainly push the adoption of IPV6 but also the need for us each to better manage and interact with a growing number of connected devices in a secure manner.”
Better protocols, such as IPV6 and HTML5 WebSockets, will help, but organizations will also have to rethink how users access, store and manipulate data in a connected age.
“Looking at the various reports coming out of IBM and Ericsson, we could be looking at potentially one trillion Internet connected devices by 2015. To put that in perspective, we passed the five billion milestone in late August/early September,” said David Link, CEO and co-founder of ScienceLogic, a provider of provider of IT Operations and Cloud Monitoring solutions.
In an age where pacemakers, industrial sensors and parking meters are Internet connected, managing devices will be of paramount importance.
“It’s not so much about managing just systems or services – it’s about managing SYSTEMS of systems and services,” Link said. “This is an unprecedented scale that I don’t think many companies are ready for – the stress testing alone on existing management tools would almost require the full-time attention of an IT department.”
2011 isn’t going to be the year any of this gets sorted out. Instead, it will be the year when organizations start waking up to the kudzu-like growth of connected devices. It will also, hopefully, be a year during in which funding will start flowing to forward-thinking startups that promise to solve the trillion-device trap.
3) Apps become even more important.
One way we can start to tame this looming trillion-device craziness is the single-function app. Many connected devices won’t be connecting to the Internet at large. They will use the Internet for single purposes. The devices themselves will be containers for very specific apps that leverage the cloud for their smarts.
The app model should start to seep into the enterprise in 2011, with enterprise app marketplaces emerging.
“Just as consumer demands forced Apple to give birth to the iTunes Store, many companies desire a consumer electronics-style experience for their business needs. Enter cloud-based application stores, where an enterprise can purchase, download and deploy business applications in their cloud environment,” said Pat O’Day, CTO and co-founder of cloud hosting provider BlueLock.
O’Day sees strong parallels between music and cloud computing in terms of format (mp3 vs. OVF), enabler (mp3 player vs. virtualization) and the delivery system (network vs. cloud). App stores for the enterprise are already available from Google through Google Apps Marketplace, and the U.S. Government recently launched Apps.gov, a GSA-operated Web site that government agencies can use to buy and deploy cloud computing applications.
In other words, expect enterprise app markets to evolve beyond the close-knit ecosystems of today, where apps are built to support and optimize the original software, such as with Salesforce.com, to general cloud app stores that look more like the app stores available to smartphone users.
4) Traditional apps get retrofitted to the cloud.
One of the things slowing down cloud adoption in the enterprise is legacy investments into traditional, shrink-wrap applications. However, as cloud APIs mature, traditional apps could more easily be moved to private and hybrid clouds.
“As enterprises move towards private, public, and hybrid clouds, independent software vendors (ISVs) will find a fast growing market for cloud-ready applications,” O’Day said. “This emerging market will prompt ISVs to turn to cloud computing providers to deliver their solutions via cloud APIs, ultimately giving ISVs cloud capability.” O’Day believes that ISVs will develop APIs that will provide a foundation to automate and manage workloads between private and public cloud architectures.
One problem with this vision, though, is scale. “A big cloud computing misconception is that applications automatically scale when you put them into the cloud,” Cisco’s Tucker said. “The reality is that while some ‘platform-as-a-service’ offerings and frameworks do provide some degree of auto-scaling, in general, applications need to be architected to scale. In cloud computing, applications can provision their own resources, so properly architected applications can in fact be made to readily scale either up or down, but this needs to be designed in.”
The cloud is fundamentally changing how applications are designed and consumed. Finding ways to factor in legacy applications as the cloud matures will accelerate its adoption. Expect to see vendors who lose out on other cloud opportunities, such as, say, with hosting, refocusing their efforts on bringing legacy applications to the cloud and making sure they are able to scale.
5) Applications begin to gain mobility too.
One of the most troubling obstacles to the cloud is security. In a world where data can be accessed from any device anywhere, traditional security falls apart. However, this argument was also made against WiFi. How could IT control a network that could leak beyond its walls?
The answer wasn’t all that difficult. With proper access control and identity enforcement in place, WiFi spread like wildfire. More interestingly, some of the early business-class WiFi startups, such as BlueSocket and Newbury Networks (now part of Juniper), offered even stronger security, limiting access by role or even physical location.
With cloud access and identity enforcement being solved by the likes of SecureAuth and Symplified, could the cloud be ready for the kind of advanced security that helped WiFi mature into an enterprise-class technology?
Duncan Johnston-Watt, CEO of cloud software company CloudSoft believes so. According to Johnston-Watt, “intelligent application mobility” is the key to broader cloud acceptance.
“Intelligent application mobility hinges on the ability to logically decompose a transactional application into fine-grained segments that, once deployed, can then be dynamically migrated under the guidance of policies designed to automatically optimize and govern the use of the cloud infrastructure available — while doing so without any interruption or degradation of the service,” Johnston-Watt said.
That’s all well and good, but this doesn’t remove security worries that most CIOs have – until you add location to the mix.
“When calculations contain sensitive data, a company may have requirements as to where the application runs (i.e. within a certain country). It’s imperative developers work with a system that can ensure geographical security so internal and external regulations are met automatically as more precedence is being put on privacy laws,” he said.
Location with the cloud is an order of magnitude more difficult than with WiFi. Ten years ago, IT managers were worried about WiFi signals beaming next door, where they could be intercepted. With a cloud-based architecture, CIOs now must worry not only about the typical risky locations, say an unsecured public WiFi network in an airport, but also risks involved with where in the world end users are.
As with a few other items on this list, this problem won’t be solved in 2011. It will, though, be one of the issues that enterprises tackle as the cloud becomes ever more mainstream.