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Hosted Private Cloud Market will Reach $39B in 2019

The leading public cloud computing service providers will gain the lion's share of all cloud-related revenue, but there are still market development opportunities for hybrid scenarios -- where combinations of public and private cloud can be justified.

The hosted private cloud market will continue to grow at a low-double-digit CAGR through 2019, reaching $39 billion, according to the latest worldwide market study by Technology Business Research (TBR).

Widespread enterprise adoption of cloud solutions will drive steady revenue growth for vendors across all cloud computing segments -- particularly for hosted private cloud vendors that offer the flexibility of public clouds with the added layer of implied security from a hosted private cloud.

"Security is a driver and a barrier of hosted private cloud adoption and will greatly affect the private cloud landscape through 2019," said Cassandra Mooshian, cloud analyst at TBR.

TBR believes that the best case scenario for hosted private cloud vendors is that customers favor the added security benefits of a hosted private cloud environment over a public cloud environment.

The worst case is yet another large-scale security breach that compounds lingering security concerns and leads to a halt in cloud computing adoption. That's unlikely, given that most reported breaches are the result of traditional enterprise IT security failures.

According to the TBR assessment, the mix of IaaS to SaaS in hosted private cloud being weighted more heavily to IaaS suggests enterprises are bringing their own software application licenses to vendor IaaS solutions.

This indicates an opportunity for some vendors to capitalize on by bringing traditional software to cloud environments for their enterprise customers that are not ready to restructure their software consumption patterns but want to exploit cloud economics to reduce costs.

Data center hosting experts, such as IBM, could benefit from this added hosting opportunity, while it may be more difficult for legacy software providers, such as Oracle, to transition their software licenses to subscriptions in private cloud scenarios.

That being said, the throng of me-too vendors that are already offering OpenStack infrastructure platforms must find a way to differentiate their product. Today, that value-add typically means providing professional services to help overcome the known inherent complexity in these IaaS software deployment projects.

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