The Next Organization

The Cloud Computing Opportunity by the Numbers

This is a very interesting collection of statistics that Rouven Cohen, the CTO of Enomaly Inc. put together. I highlighted some important facts and comments in red below.

How big is the opportunity for cloud computing? A question asked at pretty well every IT conference these days. Whatever the number, it's a big one. Let's break down the opportunity by the numbers available today.

By 2011 Merrill Lynch says the cloud computing market will reach $160 billion.

The number of physical servers in the World today: 50 million.

By 2013, approximately 60 percent of server workloads will be virtualized

By 2013 10 percent of the total number of physical servers sold will be virtualized with an average of 10 VM's per physical server sold.

At 10 VMs per physical host that means about 80-100 million virtual machines are being created per year or 273,972 per day or 11,375 per hour.

Fifty percent of the 8 million servers sold every year end up in data centers, according to a BusinessWeek report

The data centers of the dot-com era consumed 1 or 2 megawatts. Today data center facilities require 20 megawatts are common, - 10 times as much as a decade ago.

Google currently controls 2% of all servers or about 1 million servers with it saying it plans to have upwards of 10 million servers ( 10⁷ machines) in the next 10 years.

98% of the market is controlled by everyone else.

Hosting / Data center providers by top 5 regions around the world: 33,157

Top 5 break down
USA: 23,656
Canada: 2,740
United Kingdom: 2,660
Germany: 2,371

Netherlands: 1,730.

According to IDC, the market for private enterprise "Cloud servers will grow from an $8.4 billion opportunity in 2010, representing over 600,000 units, to a $12.6 billion market in 2014, with over 1.3 million units.

Market opporunity based purly on server count. $160 billion dollars divided by 50 million servers = $3,200 per server.

The amount of digital information increased by 73 percent in 2008 to an estimated 487 billion gigabytes, according to IDC.

World Population 2009: 6,767,805,208
Internet Users 2000: 360,985,492
Internet Users 2009: 1,802,330,457
Overall Internet User Growth: 399.3%
Fastest Growth Markets (Last 10 years) - Africa +1,809.8%, Middle East,+1,675%, Latin America +934.5%, Asia +568.8%
Slowest Growth Markets - North America +140.1%

Cloud value by world population: $23.64 per person
Cloud value by Global Internet population: $88.77 per person

-- Conclusions --

Based on these numbers, a few things are clear. First server virtualization has lowered the capital expenditure required for deploying applications, but the operational costs have gone up significantly more than the capital cost savings making the operational long tail the costliest part of running servers.

Although Google controls 2 percent of the global supply of servers, the remaining 98 percent is where the real opportunities are both in private enterprise data centers as well as in 40,000+ public hosting companies.

This year 80-100 million virtual machine will be created, the traditional management approaches to infrastructure will break. Infrastructure automation is becoming a central part of any model data center. Providing infrastructure as a service will not be a nice to have but will be a requirement. Hosters, Enterprises and small business will need to start running existing servers in a cloud context or face in-efficiency which may limit potential growth.

Surging demand for data and information creation will force a migration to both public and private clouds specially in emerging markets such as Africa and Latin America.

Lastly, there is a ton of money to be made.

Whitehouse's definition for Cloud Computing

Cloud computing is probably one of the most confusing technological and commercial terms. Here is how Vivek Kundra, U.S. White House Chief Information Officer explained the concept: 

 "For those of you not familiar with cloud computing, here is a brief explanation. There was a time when every household, town, or village had its own water well. Today, shared public utilities give us access to clean water by simply turning on the tap. Cloud computing works a lot like our shared public utilities. However, instead of water coming from a tap, users access computing power from a pool of shared resources. Just like the tap in your kitchen, cloud computing services can be turned on or off as needed, and, when the tap isn’t on, not only can the water be used by someone else, but you aren’t paying for resources that you don’t use. Cloud computing is a new model for delivering computing resources – such as networks, servers, storage, or software applications."

This is a easy-to-grasp way of defining cloud computing, much better than that of many vendors I met these days.