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Makin' It Rain: Cloud Revenues To Reach $45 Billion By 2013

IDC forecasts public cloud providers' revenues will reach $45 billion by 2013, up from $17 billion in 2009. That's a compound annual growth rate of 26 percent, which is more than six times the forecast growth rate for traditional IT spending. The analyst firm says cloud computing has moved from the early-adopter stage to more mainstream uptake by larger numbers of customers. "Last year we were at the end of the beginning. Now we're at the beginning of the middle," says Frank Gens, IDC vice president and chief analyst. Gens was presenting at the IDC Directions 2010 conference this week in Santa Clara, California.

Today, most major IT vendors have articulated a cloud strategy. Just last week, Microsoft CEO Steve Ballmer said the company was going "all in" on cloud computing, for both its consumer and enterprise businesses. At the same time, more enterprises have announced their own plans to transfer some of their IT to a cloud vendor. Recent examples include Coca-Cola Enterprises, the City of Los Angeles, Panasonic and the U.S. General Services Administration.

Despite the rosy forecast, cloud spending only represents a small portion of overall IT spending. Gens says cloud spending will account for only 10 percent of all IT spending by 2013. CIOs and other IT administrators are still asking questions and raising concerns. According to an IDC survey, 87.5 percent had questions about security, 83.3 percent questioned availability, 82.9 percent wanted assurances about performance, and 80.2 percent questioned the interoperability between their cloud IT and their on-premises IT. Cloud vendors need to develop satisfactory answers to those questions in order to sell to those customers, Gens says.

But the cloud does have its appeal. The same survey asked why respondents might deploy cloud computing, and 77 percent said they liked that they only have to pay for the compute cycles that they use. A similar percentage like that it's easy to deploy.

Public cloud vendors also need to address the private cloud market, a collection of IT resources that customers develop behind their own firewall. "Some people scoff at the idea of a private cloud," Gens says, "[but] scoff at your peril." That's because a private cloud addresses customer concerns about security, availability and performance while still providing public-cloud features such as quick provisioning of resources and the ability to scale computing and storage up or down as needed.