This year has been a pivotal period for many public cloud service providers. They've fully tapped the early-adopter segment of the market. The leading providers have also overcome much of the early inertia and resistance from legacy CIOs within the multinational enterprise marketplace.
The Shadow IT phenomena will continue to transform how Line-of-Business (LOB) users make purchase decisions. The path forward is clear for the savvy CEOs that choose to fund this growing trend. Eventually, even the most reluctant traditional IT leaders will embrace a hybrid cloud model, to actively participate in this business technology transformation.
The public cloud services market will nearly double over the next four years from $67 billion in 2014 to $113 billion by 2018, according to the latest global market study by Technology Business Research (TBR).
The TBR "Public Cloud Benchmark" identifies revenue and growth leaders across SaaS, PaaS and IaaS -- highlighting their strategies and future moves, as well as overall market trends in each segment and geography.
"The public cloud market is maturing, driving SaaS vendors to tailor their portfolios and teams vertically while IaaS and PaaS vendors invest in developer tools, pricing models and global expansion," said Jillian Mirandi, senior analyst at TBR. "Pressure from traditional incumbents is affecting fast-growing, pure-play vendors, and the spend among pure plays will continue to decline."
Early-to Market Public Cloud Revenue Leaders
According to TBR's assessment, portfolio developments across 2Q14 highlight the Salesforce.com ability to build out a portfolio of industry-specific solutions through internal development and ecosystem collaboration.
The launch of the Salesforce1 for Retail portfolio in June illustrates that Salesforce.com is internally developing solutions such as Mobile Clienteling, while a partnership with Philips to create a healthcare platform demonstrates ecosystem collaboration.
Microsoft will consolidate its Cloud Accelerate and Cloud Deployment programs into the Cloud Solution Provider Program to ease engagement between the company and its partners.
TBR views this consolidation as a step in the right direction for Microsoft as it aims to create value-added opportunities for partners around its cloud solutions. Additionally, Microsoft reduced program fees for partners to encourage them to resell Azure and Office 365.
To maintain IaaS leadership, Amazon (AWS) will utilize ongoing price cuts and service launches to remain competitive with Microsoft and Google on cost. Additionally, a higher-touch sales model and small but growing professional services team will help AWS better compete with the rapidly expanding cloud portfolios of IBM and HP.
Forward-Looking Public Cloud Revenue Growth Leaders
In September Box announced a beta version of Box for Office 365, enabling customers to access documents stored on Box without leaving Office applications. Also in September, Box announced Box for Industries and Accenture as a partner to help expand Box into the healthcare industry.
TBR observes that the Google cloud business is rolling out portfolio additions and improvements more rapidly than it has in recent years. By focusing on developers and acquiring tools such as monitoring, Google will add value and elevate its position against IaaS leader AWS.
The Google Apps portfolio has also become more attractive to enterprise customers through the launch of Google Drive for Work -- a premium edition of Google Apps for Business that includes unlimited storage, an API audit for developers, and increased security and management tools.
Establishing additional SoftLayer public cloud data centers in London, Hong Kong and Dallas, as well as more recently opening data centers in Melbourne, Australia, and Toronto, continues to drive IBM’s public cloud growth globally.
Furthermore, IBM’s recent acquisitions of security solutions providers CrossIdeas and Lighthouse Security Group LLC boost IBM’s global cloud revenue growth.
TBR believes that security is of top concern among multinational enterprises when deciding to transition to cloud, particularly in Europe, where data sovereignty has somewhat inhibited public cloud adoption.