Amazon announced their Q3'2015 results last week which provides hard data on how much IT is spending on OpEx. The data also reveals what the future of OpEx may look like.

1. AWS Q3’15 Results Reveal the
Future of Storage OpEx
October, 2015

2. wwww.itbrandpulse.com
The Promise of the OpEx Model
2
The UC Berkeley RAD Lab
estimates cloud providers
have lowered data center
costs by 75 to 80. Some of
this is due to purchasing
power, some is through
more efficient management
practices, and some
because these businesses
are managed with a laser a
focus on cost…
…And if traditional data
center servers, networks
and/or storage are running
at 20% utilization, the
effective cost of a given
level of computing is
actually five times higher
than assumed in a CapEx
vs. OpEx cost comparison.

3. wwww.itbrandpulse.com
Bellwether for IT OpEx
Source: Q3 2015 Financial Results Conference Call Slides,
file:///C:/Users/Frank/Downloads/Webslides_Q315_Final.pdf
IT Brand Pulse estimate for storage OpEx: 15%
Actual IT OpEx with AWS

4. wwww.itbrandpulse.com
Cloud Infrastructure Services
4
AWS = 1/3 of market

5. wwww.itbrandpulse.com
Public Cloud Storage Revenue
5
Period AWS $B AWS Share Others Total $B Storage % Storage $B
Q1 $ 1.50 33% $ 3.00 $ 4.50 15% $ 0.68
Q2 $ 1.80 33% $ 3.60 $ 5.40 15% $ 0.81
Q3 $ 2.10 33% $ 4.20 $ 6.30 15% $ 0.95
Q4 $ 2.50 33% $ 5.00 $ 7.50 15% $ 1.13
2015 $ 7.90 33% $ 15.80 $ 23.70 15% $ 3.56
**
** AWS Revenue reported for Q3 *** IT Brand Pulse estimate for storage as a percent of overall public cloud IaaS
***
If AWS has 33% market share, then the total market = 3.56B in 2015
**
**

6. wwww.itbrandpulse.com
Anatomy of IT Brand Pulse Storage OpEx
Forecast
6
Year
Traditional Enterprise
Storage CapEx Growth %
Private Cloud
On Prem OpEx Growth %
Private Cloud
Off Prem OpEx Growth % Public Cloud OpEx Growth %
Total Storage
Revenue Growth %
2013 33,879$ 113$ 157$ 2,165$ 36,314$
2014 33,993$ 0.3% 201$ 77.0% 277$ 77.0% 2,750$ 27.0% 37,221$ 2.5%
2015 33,950$ -0.1% 379$ 88.9% 524$ 88.9% 3,500$ 27.3% 38,353$ 3.0%
2016 33,290$ -1.9% 671$ 77.0% 927$ 77.0% 4,600$ 31.4% 39,488$ 3.0%
2017 32,200$ -3.3% 1,107$ 65.0% 1,529$ 65.0% 5,850$ 27.2% 40,686$ 3.0%
2018 30,200$ -6.2% 1,772$ 60.0% 2,447$ 60.0% 7,470$ 27.7% 41,888$ 3.0%
2019 27,300$ -9.6% 2,746$ 55.0% 3,792$ 55.0% 9,300$ 24.5% 43,138$ 3.0%
2020 23,700$ -13.2% 3,982$ 45.0% 5,499$ 45.0% 11,250$ 21.0% 44,431$ 3.0%
2021 19,200$ -19.0% 5,495$ 38.0% 7,588$ 38.0% 13,500$ 20.0% 45,784$ 3.0%
2022 14,600$ -24.0% 6,869$ 25.0% 9,486$ 25.0% 16,200$ 20.0% 47,154$ 3.0%
2023 9,500$ -34.9% 8,243$ 20.0% 11,383$ 20.0% 19,450$ 20.1% 48,575$ 3.0%
Decline in traditional enterprise
storage accelerates at the turn of the
decade
Offered by MSPs and public cloud providers, managed private
clouds take off. Off-prem and on-prem grow at the same rate.
It’s a zero-sum game with overall global storage
spending constant at 3%
Public cloud growth grows at 20-30%

7. wwww.itbrandpulse.com
10 Year Data Center Storage Revenue Forecast
7
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Traditional Enterprise Storage Capex
Public Cloud Storage OpEx
Private Cloud Storage OpEx
33.9
.9
3.6
30.2
4.2
7.5
On premise and off premise
Billions

8. wwww.itbrandpulse.com
10 Year CapEx vs. OpEx Storage Forecast
8
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Traditional Enterprise Storage CapEx
Public + Private Cloud Storage OpEx
88.5%
11.5%
72.1%
27.9%
Billions
From 2015-2018, OpEx grows from 1/10 to 1/4 of storage spending

9. wwww.itbrandpulse.com
Summary
• AWS revenue expected to be about $8B in 2015
• If AWS has 33% market share, the overall market = $24B in 2015
• If storage = 15%, the market for Storage OpEx = $3.6B in 2015
• IT Brand Pulse expects managed private clouds, including
offerings from public cloud providers, to take off
• In 2020 OpEx will reach 50% of storage spending
• By 2023, 80% of storage spending will be OpEx
9

10. Request the spread sheet and
build your own forecast
info@itbrandpulse.com