Cloud Computing Changing Markets

Cloud computing today includes contestants in multiple markets, arguably based on existing segments that are reforming into one vast new and broad business, in much the same way that the "global telecom business" might be thought of as a single economic category, though it is composed of many distinct segments. 

There are myths, though, says Frank E. Gillett, Forrester Research analyst. One myth is that cloud service offerings are one large market. So far, as has been the case with other potential markets such as IP Multimedia Subsystem (IMS), providers have rushed to rebrand existing offerings as "IMS compatible." The same thing is happening with cloud computing. 

Other misconceptions are that cloud computing mostly is synonymous with "virtualization" of servers or that cloud computing applications and services will compete on price. It is more than either of those trends, says Gillett.

In fact, one might distinguish at least five separate markets within the broader cloud computing universe. Two of these markets, Web-based services such as Google and software-as-a-service offerings such as salesforce.com, are known markets delivered from the cloud. In that sense, most consumers now use cloud computing applications. 

But there are business-to-business markets emerging as well, including the notion of  app-components-as-a-service, software-platform-as-a-service, and virtual-infrastructure-as-a-service. Those segments essentially provide building blocks for application and service providers to create retail offerings. 

So why might this be important for telecom or cable service providers? Cloud computing should change the way enterprises build their computing infrastructures, deemphasizing on-premises, "build your own" data centers and increasing demand for remotely-sited data centers. That should lead to a reconfiguration of the hosting business, at the very least, increasing the role for service providers and decreasing the role for smaller independent providers. 

Roughly the same thing is happening in the enterprise and consumer software businesses, shifting delivery from physical media to networked, online access. That likewise creates new demand for networking services, especially quality-assured networking services.