In the early days of the cloud, the marketing focused mainly on the benefits of cloud platforms for startups and small businesses. Those benefits still apply: with very little upfront capital investment new businesses can build out scalable infrastructure with massively more flexibility than just a decade ago, when businesses had to rely on the purchase or lease of physical hardware with payment models that were a hinderance to rapid innovation and growth.
SaaS services make it almost trivial to access powerful software platforms for everything from collaboration to customer resource management without paying for hefty license fees, system administration, and servers.
Much of the growth in the cloud in its early years was driven by smaller businesses leveraging these advantages.
But as the cloud matures, larger established businesses and enterprises have started to get on board public and private cloud platforms. Many larger businesses prefer to build their own solutions rather than using off-the-peg SaaS platforms, which results in a tipping of the growth balance away from the SaaS providers, which saw much larger initial growth, and towards the IaaS platforms that better provide for the needs of enterprise clients.
In a recent study from GigaOM Research, it was revealed that in 2014, the worldwide cloud market is expected to grow by 126%, which will incorporate a 119% growth in SaaS, and a 122% growth in IaaS.
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While the market is growing as a whole, the news may not be so rosy for the multitude of cloud providers that entered the field in its early days. According to Gartner, 25% of IaaS providers won’t last the year.
As markets mature, there’s a natural process of consolidation. Weaker business models and services that fail to properly accommodate the needs of enterprise clients will be winnowed out. That’s bad news for some, but it’s great news for those cloud providers who see the way the wind is blowing and apply their business and technology expertise to developing products that conform to the current and future requirements of enterprise-level companies.
For example, while hybrid cloud technology, which bridges the gap between the pubic and private cloud, is useful for businesses of all sizes, its primary use case is among enterprises that have existing infrastructure and legacy systems that would be expensive to abandon, but that also want to take full advantage of the flexibility and cost benefits of the public cloud. Cloud providers who cultivate the expertise and technology to help enterprises leverage their existing technology in concert with the public cloud are going to be more resilient than those that lack both public and private cloud capabilities and knowledge.
2014 is going to be an exciting year in the cloud. We can expect to see the competitive landscape and the market shift as enterprise clients fully embrace the potential cloud technology brings and as cloud providers refine their product lineup to meet those challenges.