Cloud Infrastructure Services: Here Come The Heavyweights – 2011 Edition

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This is the third in a series of reports on cloud infrastructure services. It takes an in-depth look at the global cloud compute-as-a-service market, and examines events and trends that are shaping the industry – including how service providers are evolving and adapting their offerings, which providers are gaining mindshare among leading Web destinations, and what is on the top of customers\' minds as they consider a move to cloud services. Market-sizing analysis and projections for the CaaS market through 2014 are included, as well as our current vendor leaderboard.

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Cloud Infrastructure Services: Here Come The Heavyweights – 2011 Edition

  1. 1. CLOUD INFRASTRUCTURE SERVICESHERE COME THE HEAVYWEIGHTS - 2011 EDITION HOSTING DECEMBER 2011 451 RESEARCH: HOSTING © 2011 THE 451 GROUP, 451 RESEARCH AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
  2. 2. REPORT SNAPSHOTTITLE Cloud Infrastructure Services: Here Come The Heavyweights – 2011 EditionANALYSTS Doug Toombs, Research Manager – Tier1 ResearchRELEASE DATE December 2011LENGTH 40 pagesABOUT THIS REPORTOver the past two years, the marketplace for cloud computing has gone throughdramatic and substantive changes. In the next several years, cloud computing isprojected to have stunning growth rates across all the major categories of service –IaaS, PaaS and SaaS. With a projected growth rate greater than any other sector of theservice provider marketplace that Tier1 Research currently tracks, the overall combinedcloud services market is expected to reach $23 billion by 2014.To that end, service providers are responding to the changes in the market by updatingtheir service catalogs to become more cloud-friendly. T1R expects that in the yearsahead, the lines and distinctions between traditional hosting descriptors – shared,dedicated, managed – will become less relevant, as customers make more calculateddecisions based on financial considerations between dedicated systems and cloud/elasticcapacity needs.Customer adoption of cloud computing services is showing a steady upward trajectorywithin the data that 451 Research collects, with 20-25% of customers surveyedindicating they are using some type of public cloud computing service – SaaS, PaaSor IaaS. Among the workloads customers are moving into the cloud, developmentand testing are obvious, but customers are also turning to cloud for collaborationapproaches, CRM and BC/DR needs – functions that could find their way to a cloudproduct just as easily from a business unit as from centralized IT.Finally, one of the most interesting data points to come out of 451 Research’sacquisition of TheInfoPro and ChangeWave Research is input on what criteria customersconsider most important when evaluating cloud service providers. Perhaps counter-intuitive to what service providers might expect, ‘technical specifications’ such asnetwork, compute and storage architectures seem to have the least level of importanceto customers, where as more ‘business-oriented’ attributes such as SLAs and supportmodels rank highest.451 RESEARCH: HOSTING 1© 2011 THE 451 GROUP, 451 RESEARCH AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
  3. 3. COMPANIES INCLUDED IN THIS REPORT Amazon Hosting365 1&1 Internet Hostway 8x8 IBM AdvancedHosters IKANO Communications Akamai Technologies Internap Network Services Amazon.com Joyent AT&T KKR BlueHost Layered Technologies BlueLock LeaseWeb Cbeyond Level 3 Communications CenturyTel Internet Holdings Liquid Web (CenturyLink) MaximumASP Cogent Communications Media Temple Datapipe NeoSpire Defender Technologies Group (Virtacore) netdirekt Dimension Data Holdings Network Solutions (Web.com) Endurance International New Dream Network (DreamHost) Fusepoint Managed Services (Savvis/ NTT America CenturyLink) OneNeck IT Services GI Partners OpSource GoGrid pair Networks Greensoft Solutions (GSI Hosting) PEER 1 Hosting Group NBT Quantcast HgCapital Rackspace Hosted Solutions Savvis Hosting.com2 CIS - HEAVYWEIGHTS 2011 © 2011 THE 451 GROUP, 451 RESEARCH AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
  4. 4. COMPANIES INCLUDED IN THIS REPORTServePathServIntSilver Lake PartnersSingleHopSingtelSoftLayer TechnologiesStanding CloudSunGard Availability ServicesTDS TelecommunicationsTechnology Crossover VenturesTerremark WorldwideThe Go Daddy Grouptw telecomVerizon BusinessVerizon CommunicationsVISIVMwareWeb.comWEBZILLAWindstream CommunicationsYahooZerigo451 RESEARCH: HOSTING 3© 2011 THE 451 GROUP, 451 RESEARCH AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
  5. 5. TABLE OF CONTENTS EXECUTIVE SUMMARY 1 INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 1 KEY FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . 2 METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . 2 DEFINING THE CLOUD COMPUTING MARKET 4 CORE CLOUD ATTRIBUTES . . . . . . . . . . . . . . . . . . . . . 4 TYPES OF CLOUD COMPUTING. . . . . . . . . . . . . . . . . . . . 4 FIGURE 1: Market Taxonomy 5 IAAS DEFINED . . . . . . . . . . . . . . . . . . . . . . . . . . 5 COMPUTE-AS-A-SERVICE MARKET OVERVIEW 6 COMPUTE-AS-A-SERVICE MARKET SIZE, 2010-2014 . . . . . . . . . . . 6 FIGURE 2: Compute as a Service Market Sizing and Projection 7 FIGURE 3: 2010 & 2014 Compute ‘as a Service’ Revenue by Geography 8 COMPUTE-AS-A-SERVICE GLOBAL LEADERBOARD . . . . . . . . . . . . 8 FIGURE 4: 2010-2014 Compute ‘as a Service’ Global Leaderboard 9 PROVIDER SHARE OF TOP 100,000 WEB SITES . . . . . . . . . . . . . . 10 FIGURE 5: Share of Top 100,000 Websites Attributed to Providers 11 CLOUD CUSTOMER BUYING TRENDS 15 CLOUD ADOPTION BY BUSINESSES SURPASSES 20% IN 2011 . . . . . . . . 15 FIGURE 6: Public Cloud Computing Adoption Trend 15 WHICH WORKLOADS ARE COMPANIES MOVING TO THE CLOUD?. . . . . . . 16 FIGURE 7: Workloads Moving to the Cloud 16 RELIABILITY NOT A SIGNIFICANT CONCERN . . . . . . . . . . . . . . 18 FIGURE 8: Perceptions of Cloud Reliability 18 FIGURE 9: Effects of AWS Outage on Future Cloud Use 19 WHAT ATTRIBUTES ARE CUSTOMERS LOOKING FOR IN CLOUD SERVICE PROVIDERS . . . . . . . . . . . . . . . . . . . . . 19 FIGURE 10: Service Provider Selection Criteria 20 SECURITY AND CHANGE ARE STILL LARGEST OBSTACLES . . . . . . . . . 21 FIGURE 11: Reasons for Not Using Cloud 214 CIS - HEAVYWEIGHTS 2011 © 2011 THE 451 GROUP, 451 RESEARCH AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
  6. 6. PROJECTED CLOUD SPENDING CHANGES IN 2012 . . . . . . . . . . . . 22 FIGURE 12: Cloud Spending Changes in 2012 22EVENT ANALYSIS 23 CLOUD OFFERINGS EVOLVING INTO MANAGED CLOUD . . . . . . . . . . 23 FIGURE 13: Hosted Services Consolidating Around Axis of Services, Elasticity 24 BLENDED CATALOGS OF OFFERINGS GAINING TRACTION . . . . . . . . . 24 SERVICE PROVIDERS LAUNCHING OFFERINGS ON TOP OF AMAZON AWS . . . . . . . . . . . . . . . . . . . . . . . . 25 VMWARE LINKS PROVIDERS’ CLOUDS WITH GLOBAL CONNECT . . . . . . . 25 OPEN DATA CENTER ALLIANCE PUBLISHES CLOUD USAGE MODELS . . . . . 26 OPENSTACK PROJECT KICKS OFF, GROWS AND LAUNCHES CLOUDS WITHIN 18 MONTHS . . . . . . . . . . . . . . . . . . . . . 27 M&A ACTIVITY BRISK THROUGH 2010-2011, NO SIGNS OF SLOWING DOWN . . 28 FIGURE 14: Merger and Acquisition Activity, 2009-11 29THE $64,000 QUESTION: DOES CLOUD EVENTUALLY CANNIBALIZE HOSTING? 30 FIGURE 15: Projected Impact of Cloud Computing on Hosting Revenues through 2013 31APPENDIX A: DEFINITIONS AND DELIVERY MODELS FOR THE CLOUD 32 CORE CLOUD ATTRIBUTES . . . . . . . . . . . . . . . . . . . . . 32 FIGURE 16: Cloud Infrastructure Criteria 32 WHAT ARE THE CLOUD DELIVERY MODELS? . . . . . . . . . . . . . . 36APPENDIX B: HOSTING TAXONOMY 38451 RESEARCH: HOSTING 5© 2011 THE 451 GROUP, 451 RESEARCH AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.
  7. 7. ABOUT 451 RESEARCH 451 Research, a division of leading global analyst and data company The 451 Group, is focused on the business of enterprise IT innovation. Clients of 451 Research — at end-user, service-provider, vendor and investor organizations — rely on 451 Research’s insight through a range of syndicated research and advisory services to support both strategic and tactical decision-making. © 2011 The 451 Group, 451 Research and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication, in whole or in part, in any form without prior written permis- sion is forbidden. The terms of use regarding distribution, both internally and externally, shall be governed by the terms laid out in your Service Agreement with 451 Research and/or its Affil- iates. The information contained herein has been obtained from sources believed to be reliable. 451 Research disclaims all warranties as to the accuracy, completeness or adequacy of such infor- mation. Although 451 Research may discuss legal issues related to the information technology business, 451 Research does not provide legal advice or services and their research should not be construed or used as such. 451 Research shall have no liability for errors, omissions or inad- equacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice.6 CIS - HEAVYWEIGHTS 2011 © 2011 THE 451 GROUP, 451 RESEARCH AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.

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