Cloud Infrastructure as a Service Market Update, 2015 : United States
NEW YORK, March 30, 2015 /PRNewswire/ -- Executive Summary
The U.S. Infrastructure as a Service (IaaS) market continues to witness strong demand with 2014 revenues for the service exceeding $ billion. While concerns regarding data security, compliance and application performance continue to persist, enterprises are making the leap to cloud to reduce their IT costs and manage the data growth. Enterprise adoption of IaaS is also further validated by Frost & Sullivan's 2014 Cloud survey results in which x % of US IT decision-makers indicated using public cloud IaaS to augment their IT infrastructure.
Hosted private cloud revenues, while still representing a small portion of the total market, are growing significantly faster than public cloud revenues. Cloud service providers report that enterprises that are concerned about security and reliability in the shared public cloud are willing to pay a premium for private cloud services.
While enterprises are adopting cloud IaaS despite security concerns, there is also an increased awareness of different types of cloud services (public, private, hybrid, managed) among IT decision makers. Emergence of open standards or open source-based cloud platforms—OpenStack is a widely adopted one—is a key driver for the growth in hybrid clouds, as they facilitate easy migration of cloud apps and enable multi-cloud interoperability. To take advantage of the benefits of a cloud model (reduced cost, agility, ease of procurement and limited maintenance burden), enterprises are increasingly evaluating a hybrid cloud strategy that helps them adopt the cloud configuration that best suits different application requirements.
Hence, the overall spend on cloud is increasing, but some of those dollars are being redistributed among various cloud configurations (for example, on-prem private cloud, managed cloud, hosted private cloud, bare-metal cloud), and PaaS and SaaS offerings.
This study analyzes the current IaaS market, and forecasts revenue growth over the next five years, broken down by Compute as a Service and Storage as a Service, and public and hosted private cloud. We look at the strategies and market shares of the key players to understand the competitive landscape of this fast evolving market.
CEO's Perspective
IaaS adoption is growing, as enterprises increasingly look to third-parties to assume responsibility and costs for managing data center infrastructure.
Hosted private cloud services are growing faster than public cloud, as providers roll out services that address enterprise concerns over control and security.
With the availability of open source-based cloud platforms that facilitate multi-cloud deployments and interoperability, hybrid IT deployment models are gaining traction as enterprises realize that one cloud or IT solution does not fit all their application requirements.
As hybrid IT models evolve, providers recognize the need for managed services to help enterprises transition certain applications to cloud, and keep others in-house. This need is paving the way for managed cloud offerings in the market.
Definitions
In this section, we define IaaS and related elements that are included in our study.
Infrastructure as a Service (IaaS) – Hosted, scalable data center infrastructure resources, available on-demand, without term or usage commitments, and charged via a pay-per-use model. IaaS comprises "raw" infrastructure, onto which users can build and deploy applications or workloads. The two most common types of IaaS—Computing as a Service and Storage as a Service—utilize different pricing elements.
Computing as a Service – A type of IaaS in which subscribers pay for computer resources used (usually a combination of CPU cycles and memory), plus data moving in and out (per Gigabyte).
Storage as a Service – A type of IaaS in which subscribers pay for storage capacity and data moving in and out, both on a per Gigabyte basis.
Public Cloud – Hosted IaaS services in which server infrastructure is shared among enterprise subscribers. Users access their public cloud applications via the public Internet or virtual private networks.
Private Cloud – Hosted IaaS services in which each server is dedicated to a single enterprise subscriber. Access is generally via a private network.
Note that enterprises are also building "private clouds" in their on-premises data centers, using virtualization and orchestration software on their own infrastructure. We have not included those in this study. Instead, we are focusing on hosted private clouds offered "as a Service" by third-party providers.
Hybrid Cloud – The term "hybrid cloud" generally denotes a combination of cloud environments under the management of a single enterprise; for example, private and public hosted cloud services or on-premises private cloud and a hosted cloud. For enterprises, a hybrid cloud holds the promise of easy mobility of data and/or workloads among environments. Ideally, a hybrid cloud also provides common and centralized management and orchestration tools. In reality, many "hybrid" clouds today comprise two adjacent environments with little to integrate them—a gap that is being corrected with the rollout of cloud platforms from several cloud leaders. In this study, we have captured the hosted portion of hybrid clouds in our revenue projections.
Scope of Study
In our market sizing, Frost & Sullivan has included IaaS services, as defined—comprising both public and hosted private cloud, and both Storage as a Service and Computing as a Service.
Where possible, we have excluded revenue from value-added services that providers may offer to their cloud customers, including fee-based managed and professional services. However, many providers in the market do not split their IaaS revenues based on self-service and managed services. For example, Rackspace stopped selling pure IaaS in late 2014. The company's offer comes as a bundle wherein customers not only buy compute, storage, databases and a variety of other products as a service, but they also purchase a support package to go along with it. Prices range from $ x cents per GB hour of compute capacity for a basic package, to $ x cents per GB hour for a broader package, with a $ x minimum. Inconsistencies in reporting may have led to inclusion of some revenues from managed portions in our total market estimate. We will revise this estimate as providers clarify their definitions and start to record revenues separately.
We have also excluded hosted services that are not available on-demand, such as co-location and managed hosting services (see report: CC 3-4, U.S. Data Center Services Market), and "pull through" IaaS, in which a provider offers elastic storage or computing resources as part of a different service offering, such as PaaS or SaaS.
Our reasoning is that this type of service constrains users to a specific platform, rather than providing raw infrastructure. Furthermore, in most cases, the provider defines the computing or storage resources as an element of the primary service (SaaS or PaaS), rather than stand-alone IaaS.
While some of the industry's giants, including Microsoft and Google, entered the cloud infrastructure market as an adjunct to other cloud services, they both now have a dedicated IaaS offering—Microsoft Azure and Google Compute Engine, respectively. Although Frost & Sullivan expected platform-based infrastructure services that enable enterprise IT to manage, integrate, and deliver corporate applications (rather than run them) to emerge as the preferred cloud infrastructure service for enterprises, relegating pure IaaS to niche use cases such as test and development, market demand for pure IaaS has remained strong.
Database as a Service or DBaaS can be considered a "pull through" IaaS, but due to lack of sufficient data on the revenue breakdowns from the providers we are counting DBaaS within the IaaS revenue market size.
Read the full report: http://www.reportlinker.com/p02831959-summary/view-report.html
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