Posted by: Greg Ness | April 25, 2013

Putting the Public Cloud into Perspective

The Amazonian ecosystem of mostly small and medium enterprises has grown into an estimated $4B market over recent years as public cloud has captured the imagination of developers and smaller IT shops.  Since 2009 the 3rd party data center and hosting market has grown from about $11B to close to $22B, according to one respected analyst firm.  One analyst firm early in 2012 even projected a shortage in colocation space in coming years.  I tend to compare the public cloud space to the retail and wholesale colocation industry because I think public cloud is really a segment of a larger retail and wholesale colocation market.

Clearly enterprises are investing heavily in 3rd party data centers for a much larger variety of services and apps than they are in the public cloud.  If you want to put the public cloud within a broader perspective, overall IT spending is above $3T per year.  Public cloud represents roughly 1% of overall enterprise IT spending.  If you were an accountant the public cloud would need to grow to a 5% share of IT spending to become a material issue, which is part of the reason that Amazon’s own cloud revenues have been harder to track, at least until recently.

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