Cloud Computing Taking Off

Morgan Stanley produced a report in May about the cloud computing industry. This is important because it takes an investor view of this market and the adjacent markets like servers that support cloud.

Morgan Stanley’s evidence is based on a global survey of IT managers on cloud migration in the US, Europe and Asia-Pacific. Overall findings:

1. Among the 300 IT decision-makers interviewed, the percentage using the public cloud is expected to rise from 28 percent to 51 percent in three years, while the portion of their workload running in the cloud likely will more than double, from 10 percent to 22 percent. This is good news for the cloud industry.
2. Server growth shifts to the cloud: They estimate that the number of servers shipping into public-cloud environments will grow at a 60% CAGR through 2013. This migration of workloads from on-premise environments to the public cloud will continue to be a key driver of technology spending.
3. On-premise server growth moves downward. Survey respondents cited server hardware as the primary area of savings from the migration to cloud computing. Businesses expect to reduce server spending by 8.6 percent over the next three years. Vendors that depend on on-premise server shipments will likely be hard hit.

This trend will be positive for companies that are well positioned in this space. Amazon, Salesforce and Rackspace will see direct growth. Others, including Broadcom, EMC, Juniper Networks and VMware, see growth as suppliers to this industry.

The migration to cloud will be one of the primary drivers of IT and technology spending over the next 3 years. I said in an earlier blog that 2011 was the year that we would see cloud as more of a mainstream option. This is a positive step for this industry since it adds another voice to the move of cloud from a startup to a more mature industry.

Rose Klimovich is a consultant and writer on technology. Formerly she was VP Product Management and Product Marketing for the colocation and interconnection products for Telx, where she led the efforts in creating the Telx strategy and developing and investing in new products and services in areas like colocation, cloud, Ethernet Exchange and Telepresence video.