Global public cloud services revenues have been ticking over to the tune of 19.2% in the first half of 2023 with software as a service (SaaS) representing the lion’s share but platform as a service (PaaS) the biggest growth, according to IDC. The analyst firm released figures from its Worldwide Semiannual Public Cloud Services Tracker,… Read more »
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Despite mobility being one of the top priorities for organizations throughout the world, research from IDC has shown only 13% of those who are given the option actually work from home.
Enterprise mobility has proved to be one of the more prominent trends emerging out of the evolution to cloud-based platforms, as employees aim to create a working environment which encourages innovation and creativity however the study shows the generosity is not being taken advantage of. One statistic which could be seen as an obstacle to adoption is two in five line managers admit they do not want their employees to work from home.
Numerous organizations have highlighted mobility strategies as a priority for coming months, as organizations aim to utilize the power and freedom of cloud based applications to increase the productivity of employees. Findings from 451 Research claims 40% of enterprise organizations are prioritizing mobilization of general business apps over the next two years, as opposed to focusing solely on field services and sales teams. The trends towards mobility are also confirmed when assessing the M&A market. In the mobile device management and mobile middleware segment, 28% of the total deals (21 of 74) and 77% of their total value ($3bn of $3.9bn) over the past decade have occurred over the past two years alone.
Although other research has suggested organizations are shifting to a mobility mind-set, IDC’s study has outlined the drive towards is still in the early adopter stages, despite numerous organizations claiming its importance. The leadership team were particularly critical of considering working from home to be acceptable, as only 43% of employees are confident leadership is fully behind mobility as a concept. Of those who do have the opportunity to work from home, only 14% spend more than half their time outside the office.
From a leadership perspective, new EU regulations regarding the protection, residence and transition of data could have an impact on their attitudes towards mobility, as penalties for non-compliance will be to the tune of €20 million or 4% of the organization’s annual turnover, whichever is greater.
While vendors are striving to improve the efficiency of mobility solutions, as well as championing efforts to make the technologies on the whole more secure, unless the adoption of the mobility culture is increased from the end-user side, there are unlikely to be any changes in the near future. If the statistics remain true, mobility initiatives will not achieve the required ROI, which could have a negative long-term impact on the investments made into the mobility segment on the whole.
The boom in public cloud service spending will propel AWS and Microsoft into the top five of the world’s biggest storage vendors, according to analysts.
Separate reports from IDC and the 451 Group suggest that the public cloud will growth overshadow the rest of IT and change the power balance.
The latest Public Cloud Services Spending Guide from IDC predicts that global spending on public cloud services will grow at six times the rate of the rest of the IT industry. With a 19.4% compound annual growth rate (CAGR) public cloud spending will double from last year’s $70 billion to $141 billion in 2019.
The popularity of Software as a Service (SaaS) will continue as it makes up two thirds of all public cloud spending in the forecast period. However Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) will grow faster, with spending on each rising by 27.0% and 30.6% respectively.
By 2018, most software vendors will have fully shifted to a SaaS/PaaS code base, predicted Frank Gens, Chief Analyst at IDC. This means the software industry is at a tipping point where SaaS becomes the preferred option.
The industries with the largest public cloud services expenditures in 2015 were discrete manufacturing at $8.6 billion, followed by banking and professional services at $6.8 billion and $6.6 billion, respectively. Telecommunications will be the fastest-growing vertical industry over the 2014-2019 forecast period with a worldwide CAGR of 22.2%. Other industries expecting a five-year CAGRs of over 20% are the media, government, education, retail, transport and utilities.
“The cloud is the future of IT but every organisation’s journey to the cloud is different and won’t always result in moving to a public cloud,” said Mark Ebden, strategic consultant at Trustmarque. However, he warned that companies need to assess the functions that can be moved to the cloud with the least disruption.
The fast growth of public cloud service companies is already disrupting the storage market, according to a 451 Research study. It found that public cloud storage will account for 17% of enterprise storage spending by 2017, up from 8% today. In some verticals like retail the public cloud will account for 25% of total storage spending by 2017.
Public cloud will shift the IT budget so that more money is spent on storage, according to the report. In addition, Amazon Web Services and Microsoft will become top five storage vendors by 2017. While the traditional storage players like leader EMC can dominate now, in two years spending on traditional SAN and NAS products will be more muted, said the report. Dealing with data and storage capacity growth is by far the single greatest pain point for storage managers and improving backup and disaster recovery will be the top storage objectives for 2016, according to 451 analyst Simon Robinson.
Companies across the world are still furiously modernising their IT infrastructure to support cloud services, according to analyst IDC, which reports ‘healthy’ growth in this sector continues.
It notes that vendors of servers, storage and Ethernet switches are all experiencing declining revenues in traditional IT environments. The figures also indicate increasing confidence in public cloud services, claims IDC.
The latest Worldwide Quarterly Cloud IT Infrastructure Tracker from IDC compiled sales figures for Q3 2015 and found a 23% rise in revenues on the same period in 2014, with total revenue of $7.6 billion being reported by manufacturers.
Infrastructure investment is growing at a faster rate than application sales, the report noted. The proportion of cloud IT infrastructure sales in the cloud industry climbed to 33.8% in 3Q15, up from 28.7% a year ago. The revenue from infrastructure sales to the private cloud sector grew by 18.8% to $2.9 billion, while sales to the public cloud rose by 25.9% to $4.6 billion.
By contrast, Q3 revenue from sales to traditional (non-cloud) IT set ups fell by 3.2% in comparison to the previous year’s third quarter, with sales of three technology segments (servers, storage and Ethernet switches) all going into decline in the non-cloud sector. However, all three technology markets showed compensating growth in the cloud sector. Strong year-over-year growth in both private and public cloud segments is reported, with server sales leading the charge in the private cloud sector, growing at 24.3%. Meanwhile, in the public cloud, sales of Ethernet switches are growing fastest of all equipment types, rising by 37.8%. Public cloud spending on storage grew 26.7% year on year.
This healthy double-digit growth in cloud IT deployments indicates an increasing preference for public cloud infrastructure according to Kuba Stolarski, Research Director for Computing Hardware and Platforms at IDC. “As public cloud offerings continue to improve in reliability and security, customers are becoming more comfortable with the flexibility they get from these these elastic environments,” said Stolarski.
Sales in Japan grew fastest in Japan at 47.1% year over year, followed by Asia/Pacific (excluding Japan) at 35.3%, Western Europe at 22.1%, Canada at 22.0% and the United States at 20.1%. However sales in Central and Eastern Europe fell 10%, which IDC attributed to political turmoil.
“As public cloud continues to becomes the de-facto choice for compute, users will greatly benefit from the next generation of container technology, which will enable true usage-based billing and flexible IT infrastructure that scales according to demand – rather than the fixed instances set by the provider,” commented Richard Davies, CEO of ElasticHosts. “It’s time for public cloud to deliver the next generation of infrastructure to customers and bring utility computing to the present so customers can stop paying for capacity they’re not using.”
Hard disk vendor Western Digital is to buy chip maker SanDisk for around $19 billion as the consolidation of chip-making industry continues.
Flash specialist SanDisk is one of the largest makers of NAND flash memory chips. The capacity of NAND Flash Memory products to store data in a small footprint, while simultaneously using less power but granting faster access to data, has made this technology particularly popular in the mobile, internet of things and data centre sectors, Increasingly, according to analysts, NAND is becoming the storage technology of choice in data centres that support cloud computing.
The market for NAND flash chips rose to $28.9 billion in 2014, according to IDC and SanDisk (with joint venture partner Toshiba) was the largest producer.
Meanwhile the market for traditional disk drives, where Western Digital is a market leader, is declining, say analysts. The commoditisation of hardware, driven by the software definition of data centres, has seen profit margins on sales decline, even if volumes are up.
Western Digital had a leading 44% share of the market for hard disk drives in 2014, according to statistics from market researcher IDC. However, it suffered a sales decline of 4% in its most recent financial year and the overall storage business also shrank, to $32.9 billion.
“With new storage companies coming through with all-flash systems based on consumer-grade substrate, it is not in WD or Seagate’s best interests to try and do economies of scale aimed more at the enterprise only,” said analyst Clive Longbottom, senior director at research company Quocirca. “By buying up consumer flash companies, they get that economy of scale for themselves.”
The disruption of the IT manufacturers by the cloud has changed the strategies of the encumbents like Western Digital, said Longbottom. “ Dell, HP, IBM and others do seem to be more worried about the new kids on the block than each other at the moment,” said Longbottom.
The cash-and-stock offer values SanDisk at $86.50 per share, or a total equity value of about $19 billion, using a five-day volume weighted average price ending on Oct. 20 of $79.60 per share of Western Digital stock. SanDisk’s shares rose 6.4% to $80 in pre-market trading. Western Digital’s shares were down 1.1% at $74.
The deal is expected to close in the third calendar quarter of 2016.
Little known unbranded manufacturers are making inroads into the storage market as the cloud commoditises the industry storage, according to a new report by market researcher IDC. Meanwhile, the market for traditional external storage systems is shrinking, it warns.
The data centres of big cloud companies like Google and Facebook are much more likely to buy from smaller, lesser known storage vendors now, as they are no longer compelled to commit themselves to specialised storage platforms, said IDC in its latest Enterprise Storage report.
Revenue for original design manufacturers (ODMs) that sell directly to hyperscale data-center operators grew 25.8 per cent in the second quarter of 2015, in a period when overall industry revenue rose just 2.1 per cent. However, data centre purchases accounted for US$1 billion in the second quarter, while the overall industry revenue is still larger, for now, at $8.8 billion. However, the growth trends indicate that a shift in buying power will take place, according to IDC analyst Eric Sheppard. Increasingly, the platform of choice for storage is a standard x86 server dedicated to storing data, said Sheppard.
ODMs such as Quanta Computer and Wistron are becoming increasingly influential, said Sheppard. Like many low-profile vendors, based in Taiwan, they are providing hardware to be sold under the badges of better known brand names, as sales of server-based storage rose 10 per cent in the second quarter to reach $2.1 billion.
Traditional external systems like SANs (storage area networks) are still the bulk of the enterprise storage business, which was worth $5.7 billion in revenue for the quarter. But sales in this segment are declining, down 3.9 per cent in that period.
With the cloud transferring the burden of processing to data centres, the biggest purchasers of storage are now Internet giants and cloud service providers. Typically their hyper-scale data centres are software controlled and no longer need the more expensive proprietary systems that individual companies were persuaded to buy, according to the report. Generic, unbranded hardware is sufficient, provided that it is software defined, the report said.
“The software, not the hardware, defines the storage architecture,” said Sheppard. The cloud has made it possible to define the management of storage in more detail, so that the resources can be matched more evenly to each virtual machine. This has cut the long term operating costs. These changes will intensify in the next five years, the analyst predicted.
EMC remained the biggest vendor by revenue with just over 19 per cent of the market, followed by Hewlett-Packard with just over 16 per cent.
Cisco says cloud – primarily private cloud – is the key to unlocking new business value
Cloud business is moving into a second wave of adoption, according to a global study commissioned by Cisco. Half (53 per cent) the survey group said they expect cloud to raise their revenues in the next two years – with almost as many (44 per cent) identifying private cloud as their chosen enabler.
The lack of private cloud options could be handicapping cloud business, analyst IDC reports, in its Cisco-sponsored Infobrief, “Don’t Get Left Behind: The Business Benefits of Achieving Greater Cloud Adoption”. Only one per cent of organizations claimed to have optimized cloud strategies in place and 32 per cent admitted they have no cloud strategy at all.
Cisco’s customers would be more interested in the second wave of cloud if it resolved their concerns about security, performance, price, control and data protection, according to its vice president for global cloud and managed services sales, Nick Earle. Cisco’s customer sentiments seem to be reflected in the IDC study, according to Earle, and the interest in private and hybrid clouds would seem to confirm this, with 64 per cent of cloud adopters reportedly considering hybrid cloud.
“Our strategy to build private and hybrid infrastructure is reflected in the new IDC study,” said Earle.
The study identifies five levels of cloud maturity: ad hoc, opportunistic, repeatable, managed and optimized. As the cloud strategy of organizations matures, moving from the lowest level ad hoc clouds to fully developed optimized clouds, ‘dramatic’ business benefits materialise, Cisco contends. It quantifies these benefits as revenue growth of 10.4 per cent, IT cost cutting at 77 per cent, a 99 per cent reduction in the time to lay on IT services and applications, a 72 per cent improvement in meeting service level agreements and a doubling of the IT department’s capacity to invest in new projects.
On a macro economic level the study estimated that ‘mature’ cloud organizations gain an average of $1.6 million in additional revenue for every application run on private or public cloud. They also cut the cost per application by $1.2 million by running them in the cloud.
Cisco said that private cloud will improve resource use, allow projects to run at greater scale and will give faster response times, while providing more control and security.
Though concerns about the complexities of hybrid cloud adoption – workload portability, security, and policy enablement – were reflected study, up to 70 per cent of respondents expect to migrate data between public and private clouds or among multiple cloud providers.
Spending on cloud as a proportion of overall IT expenditure is growing at healthy rates
Cloud-related IT infrastructure spending in the EMEA region grew 16 per cent year on year to reach $1.01bn in the first quarter of this year, representing just under 20 per cent of the overall IT infrastructure spend according to analyst house IDC.
Spending on IT infrastructure (servers, disk storage, and Ethernet switches) for public cloud accounts for about 8 per cent and private cloud 11 per cent of the overall spend; the firm previously estimated that growth in spending on public cloud would outpace private cloud spending by nearly 10 percentage points (25 and 16 per cent, respectively).
Michal Vesely, research analyst, european infrastructure at IDC said much of the expenditure in Western Europe was fuelled mainly by public cloud and large-scale datacentre installations.
“Private cloud expenditure, especially on premises, on the other hand, is more directly connected to regular IT investments by enterprises,” he explained. “Private cloud spending saw a slower pace as users assess their storage, as well as integrated and hyperconverged systems, strategies. Once decisions are made, we expect another major push in the forthcoming period.”
The firm also said unstable macroeconomic conditions in Southern and Western Europe haven’t adversely impacted spending trends , although on-premise deployments seem to be growing at a slower rate – in part due to an increased shift to cloud. According to the analyst house this shift is in full swing. In April the firm forecast that cloud will make up nearly half of all IT infrastructure spending in four years.
Revenue from cloud infrastructure including servers, storage and switches grew 25.1 per cent year on year in the first quarter of this year – the highest rate in over a year according to analyst house IDC and the second highest level of total spending in the past nine quarters.
Cloud IT infrastructure spending climbed to 30 per cent or nearly a third of overall IT infrastructure spending in the first quarter of this year, up from 26.4 per cent last year. Private cloud revenues grew nearly 25 per cent year on year, which was slightly outpaced by public cloud growth at close to 26 per cent.
Kuba Stolarski, research manager, server, virtualization and workload research at IDC said the shift to cloud seems to be the main driver of growth in the IT infrastructure market at the moment.
“Cloud IT infrastructure growth continues to outpace the growth of the overall IT infrastructure market, driven by the transition of workloads onto cloud-based platforms,” Stolarski said.
“Both private and public cloud infrastructures have been growing at a similar pace, suggesting that customers are open to a broad array of hybrid deployment scenarios as they modernize their IT for the 3rd Platform, begin to deploy next-gen software solutions, and embrace modern management processes that enable agile, flexible, and extensible cloud platforms.”
HP, Dell and Cisco landed in the top three spots in IT infrastructure market share with 15.7, 11.9 and 9.3 per cent respectively. Lenovo’s four per cent year on year growth seems down largely to its acquisition of IBM’s x86 server business.
It hasn’t been the best quarter for storage on the other hand. Year on year quarterly growth rates declined slightly for both EMC and NetApp, and interestingly ODM direct sales also declined, suggesting both enterprises and the scale-out market still find big box vendors a competitive option when compared to lower cost Chinese and Taiwanese manufacturers.
The utilities sector is struggling with an ageing workforce and lacks critical cloud skills
About three quarters of utilities see moving their on-premise apps and workloads into the public cloud as a dominant component in their IT strategies, according to a recent IDC survey. But Gaia Gallotti, research manager at IDC Energy Insights told BCN the firms need to first overcome a pretty significant skills gap and an ageing workforce if they are to modernise their systems.
According to the survey, which polled 38 international senior utility executives, the vast majority of respondents are sold on the benefits cloud could bring to their IT strategies. About 87 per cent said cloud services provide better business continuity and disaster recovery than traditional technology, and 74 per cent said public cloud migration will be dominant within their broader IT strategy.
Interestingly, while 76 per cent of respondents believe cloud providers can offer better security and data privacy controls than their own IT organisation, 63 per cent said ceding control to a cloud provider is a barrier to their organisation’s adoption of cloud services.
“The utilities industry can no longer afford to deny the advantages of ‘going into the cloud.’ As security concerns are further debunked, utilities expect to see a significant push in their cloud strategy maturity in the next 24 months, so much so that they expect to make up lost ground and even supersede other industries,” Gallotti said.
But most also believe internal IT skillsets not up to speed with new cloud standards, methodologies, and topologies. 74 per cent said they will need a third-party professional services firm to help develop a public cloud strategy.
“This is a huge problem the industry is facing, but not exclusively for cloud services. Utilities are struggling to attract talent in all IT domains, especially for the ‘third platform’, as they compete with companies in the IT world that attract ‘Generation Y’ talent more easily,” Gallotti explained.
“The utilities industry also has an issue with aging workforce outside of IT and across its other business units. In the short term, we expect utilities to rely more on their service providers to fill skills gap that emerge, in the hope of more easily attracting the right talent as the industry transforms and becomes more appealing to Gen Y.”