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Cloud Services To Top $68 Billion In 2010

Global cloud services this year will reach $68.3 billion, as large corporations increasingly cut multi-thousand-seat deals with vendors, a market research firm says.

The expected revenue this year amounts to a 16.6% increase from 2009, when sales hit $58.6 billion, Gartner reported Tuesday. The strong growth is expected to continue for several years, reaching $148.8 bill in 2014.

"We are seeing an acceleration of adoption of cloud computing and cloud services among enterprises and an explosion of supply-side activity as technology providers maneuver to exploit the growing commercial opportunity," Gartner researcher Ben Pring said in a statement. "The scale of application deployments is growing; multi-thousand-seat deals are increasingly common."

Enterprises appear to be embracing the core ideas of cloud computing, such as pay for use, multi-tenancy and external services, Gartner said. In part, the popularity of the computing model is due to the financial downturn over the last 18 months, which has made the ability of cloud computer to deliver functionality less expensively than in-house software attractive.

"Cloud computing has become more material, because the challenges inherent in managing technology based on the principles of previous eras -- complex, custom, expensive solutions managed by large in-house IT teams -- have become greater, and the benefits of cloud computing in addressing these challenges have matured to become more appropriate and attractive to all types of enterprises," Pring said.

The largest markets from a geographic perspective are in North America and Europe. The U.S. share of the worldwide cloud services market was 60% in 2009, Gartner said. This year, the U.S. share will fall to 58%, declining to 50% by 2014, as companies and governments in other countries and regions adopt cloud services.

In industry terms, financial services and manufacturing industries are the largest early adopters, with communications and high-tech industries also leveraging the cloud in significant volume.

Despite the positive projections, large corporations still have "strong concerns" about cloud computing, with security topping the list, Gartner said. Other concerns include availability of service, vendor viability and maturity.