Cloud Computing Will Drive Revenue, But What Types, How Much?

Service providers widely believe cloud computing will be an important source of new revenue, and there is truth to that belief, but possibly not the way many are thinking about the business. Cloud computing includes a number of discrete potential revenue streams, ranging from direct retail sales of applications to end users, either consumer or business. There is the rental of computing cycles and storage capabiltiy, as well as "platform" as a service, where a customer might rent an applications environment, often for purposes of developing new apps, for example.

By most current projections, SaaS will represent the biggest business, representing the most revenue. IaaS might be the next biggest, while PaaS will remain the smallest business, in terms of revenue. One forecast by the Yankee Group has SaaS representing perhaps 70 percent of total revenue in 2013.

North America, specifically the U.S., currently represents the largest opportunity for SaaS, and it is the most mature of the regional markets, Gartner argues. SaaS software revenue is forecast to total $9.1 billion in 2012, up from $7.8 billion in 2011, Gartner says. But that is revenue earned by software suppliers, not directly by hosting companies, data center providers or telcos.

North America shows the highest SaaS deployments in expense management, financials, email and office suites, for example. It might be prudent to discount the notion that cloud computing revenues for service providers running data centers will capture very much of that sort of revenue.