Gartner Says Worldwide Cloud Services Market to Surpass $68 Billion in 2010

North America Accounted for 60 Per Cent of Cloud Services Revenue in 2009
(PresseBox) (STAMFORD, Conn., ) Worldwide cloud services revenue is forecast to reach $68.3 billion in 2010, a 16.6 per cent increase from 2009 revenue of $58.6 billion, according to Gartner, Inc. The industry is poised for strong growth through 2014, when worldwide cloud services revenue is projected to reach $148.8 billion.

"We are seeing an acceleration of adoption of cloud computing and cloud services among organisations and an explosion of supplyside activity as technology providers manoeuvre to exploit the growing commercial opportunity", said Ben Pring, research vice president at Gartner. "The scale of application deployments is growing; multithousandseat deals are increasingly common. IT managers are thinking strategically about cloud service deployments; moreprogressive organisations are thinking through what their IT operations will look like in a world of increasing cloud service leverage. This was highly unusual a year ago".

Gartner estimates that, over the course of the next five years, organisations will spend $112 billion cumulatively on software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS), combined.

"After many years of germination, most notably in the SaaS arena, the core ideas at the heart of cloud computing - such as pay for use, multitenancy and external services - appear to be resonating more strongly," Mr Pring said. "In part, this can be explained by macroeconomic factors. The financial turbulence of the last 18 months has meant every organisation has been scrutinising every expenditure. An IT solution that can deliver functionality less expensively and with more agility (remembering that time is money) is hard to ignore against this backdrop."

More fundamentally, 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 inhouse 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 organisations."

Gartner is seeing an acceleration of adoption of cloud computing and cloud services among organisations and an explosion of supplyside activity as technology providers manoeuvre to exploit the growing commercial opportunity. North American and European markets represent the largest markets from a geographic perspective, and while other geographies around the world will experience growth, this growth will not notably alter the overall weighting away from the larger, moremature regions over the course of the next five years.

The US share of the worldwide cloud services market was 60 per cent in 2009 and will be 58 per cent in 2010, but by 2014, this will be diluted to 50 per cent as other countries and regions begin to adopt cloud services in moresignificant volumes. Western Europe is expected to account for 23.8 per cent of the cloud services market in 2010, and Japan will represent 10 per cent. In 2014, the UK is forecast to account for 29 per cent of the market, while Japan will represent 12 per cent of cloud services revenue.

"We have not seen any evidence yet to support the oftentouted hypothesis that smaller and/or developing countries will "leapfrog" Western markets - and come to represent a large proportion of the overall worldwide market - through their adoption of the Internet and cloud services," Mr Pring said.

In industry terms, the financial services and manufacturing industries are the largest early adopters of cloud services. Communications and hightech industries are also leveraging the cloud in significant volume, while the public sector is also clearly interested in the potential of cloud services and its share of the overall market.

However, Mr Pring said that, although interest in cloud computing has grown, many organisations still have strong concerns about the idea of cloud computing and cloudcomputing products as well as cloud services. Security is primary among these, while other concerns include availability of service, vendor viability and maturity.

"Many organisations may be examining cloud computing and cloud services, but are far from convinced that it is appropriate for their requirements," he said. "We expect that this will be a significant opportunity for existing IT services players to evolve their current offerings - such as outsourcing, system integration and development - to become cloudenabled and try to combine the best of the two worlds, namely traditional IT services and cloud computing."

Additional information is available in the Gartner report "Forecast: Public Cloud Services, Worldwide and Regions, Industry Sectors, 2009-2014." The report is available on Gartner's website at


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