Over a dozen big companies such as IBM, VMWare, and HP are creating their own cloud-based services that will continue to put pressure on hardware such as servers and workstations. However, it’s Amazon that’s emerging as an early leader in the industry.
Amazon Web Services (AWS) is expected to reach $24 billion in annual revenue by 2022. AWS’ growth reflects Amazon’s increasing success in dominating the enterprise sector. The Internet retailer offers cloud services through offerings such as the RedShift data warehouse and DynamoDB NoSQL database.
How big is Amazon’s cloud computing network? Netcraft, a U.K. research firm, estimates that Amazon AWS has 158,000 servers. Last year, Netcraft reported that AWS had become the largest hosting company in the world based on the number of web-facing computers.
On June 3, Morgan Stanley analysts said they expect AWS to become a threat to hardware vendors like HP, Dell and IBM as well as storage vendors such as EMC and NetApp.
However, niche providers that target a specific industry could be insulated from Amazon. One company vying for a share of the cloud is Echopass, which focuses on data solutions for large contact centers. The California-based company announced this past month that it worked with Overstock.com to save the Internet retailer over $26 million over a five-year period by adding flexibility and scalability to its contact center operations.
“The previous Overstock.com contact center infrastructure relied on outsourcing extra agents during the high-volume holiday shopping period. Incorporating the cost and consistency of those resources was a challenge,” said Gil Cattelain, Echopass’ digital marketing director. “Overstock.com’s desire was to switch to a more flexible model – one that could seamlessly handle their seasonality and growth.”
Governments are also interested in using the cloud to benefit the public service. According to the National Cloud Computing Strategy (NCCS), the Australian government claims the cloud is so important that if small businesses ignore its benefits, the results could be devastating:
“New digital technologies such as cloud services are the critical internal drivers for efficiency and innovation in small businesses. A failure to adopt new technologies will leave small businesses at a severe disadvantage against competitors both domestic and abroad,” reads an excerpt from the NCCS.
Cloud providers have also started building clouds using cheap custom-made servers. Facebook has the Open Compute Project which helps users build low-cost custom hardware. Morgan Stanley expects storage revenue to grow between zero and 5 percent in the future, compared to the 5 percent to 10 percent growth it has been seeing. The slower growth is attributable to organizations migrating their data to the cloud.