IDC Predicts $1.6B Cloud Market in 2011

The cloud is set to dominate networking discussions in 2011, but revenues are still growing.

By Sean Michael Kerner | Posted Jan 6, 2011
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The cloud will be discussed everywhere in 2011, but how much money actually is there in the cloud business? In a live webcast event this week, analyst firm IDC's Research Vice-President Cindy Borovick forecast a $1.6 billion cloud market in 2011.

Borovick's forecast is not for the entire cloud services ecosystem, but rather is a subset of IDC's data center and networking forecast. The $1.6 billion figure is IDC's projection for network equipment revenues used to power both public and private cloud deployments in 2011.

"Cloud is the prevailing IT trend of the decade," Borovick said. "We really see it as being integral to IT deployments and it's no longer just a buzzword."

Borovick noted that cloud infrastructure provides a reduced cost of ownership and enables IT to have a more dynamic response to the business. She added that enterprises get a better allocation of resources with cloud deployments.

Different industries will likely have different adoption rates for the cloud. Borovick noted that highly regulated industries are going to be less willing to trust a cloud provider. That said, she added that the pressure to reduce cost will encourage adoption, even for regulated industries.

"For 2011, we think we'll see even more announcements from suppliers and IT network managers will be much more ready to look to see how they can deploy the network in support of cloud deployments," Borovick said.

Looking beyond cloud infrastructure, IDC is also seeing growth in virtualization form factors, though the numbers are still small. Borovick noted that in 2010, IDC forecast that virtual network service form factors would ship during the year. For the application delivery market, Borovick said that the opportunity for virtual form factors was approximately $40 million in 2010.

Multiple vendors including Riverbedand Blue Coat announced new virtual WAN optimization and application delivery offerings during 2010.

"We're starting to see enterprises decide how it is that they want to deploy virtual network services," Borovick said.

In terms of who is using virtual form factors today, Borovick noted that cloud service providers as well as smaller data centers are more willing to look at the virtual form factor for a network service

"Additionally there are intricacies in terms of placement in the network and that really dictates where we'll see virtual form factors emerge," Borovick said.

For 2011, IDC is forecasting more unified communications applications to take advantage of virtual form factors.

"Networking vendors increasingly will look at how they need to have support for virtual network services," Borovick said. "Best practices will emerge and we will see an uptick in deployments for virtualization."

Sean Michael Kerner is a senior editor at InternetNews.com, the news service of Internet.com, the network for technology professionals.

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