Dell Merger with EMC Points to Cloud Future

The merger of Dell and EMC, at $67 billion, is the biggest-ever merger in the information technology industry.

Whatever else the deal might mean, it shows the evolution of computing from the personal computer era to the era of cloud and mobile computing.

In the past, most computing happened locally, whether on mainframes, minicomputers or PCs. These days, most computing happens remotely, in data centers. So one might logically argue that the Dell merger with EMC is an effort to transition to the next computing era.

It is virtually impossible to compare the volume of local computing compared to remote--or cloud--computing. It is easier to quantify the amount of computing-related traffic.

According to Cisco, perhaps 85 percent of applications traffic volume now is directly produced by cloud computing.

Likewise, the installed base of computing devices has shifted dramatically to smartphones, devices that rely on cloud or remote computing for most of their value.

By 2017, 87 percent of the global smart connected device market will be tablets and smartphones, with PCs (both desktop and laptop) being 13 percent of the market.

Cloud-based apps now matter because nearly all apps--enterprise or consumer--now are consumed that way.

In 2015, 83 percent of all mobile apps used by U.S. consumers are cloud apps, according to Cisco. By 2019 cloud apps will represent 90 percent of all mobile apps.

The trend often will appear less advanced in the enterprise computing segment, as cloud computing, by volume of operations or enterprise spending, rarely is more than small percentage of total spending.

By 2018, cloud data centers should represent as much as 76 percent of all data center workloads, according to Cisco.

Overall, most U.S. businesses use cloud computing to some extent, with most enterprises using a hybrid approach (both internal and external cloud operations).

Of the 37 percent of U.S. small businesses that already buy cloud-based services, most buy software as a service, with marketing, e-commerce, sales, collaboration and productivity functions used among the top six functions being cloud sourced, although back office often is the function most likely to be moved to the cloud.

The core market might be about three million firms, largely in the services segment, followed by retail and healthcare. There are perhaps nine million additional small or home office based businesses (owner operated or with a maximum of four employees).

By definition, software as a service is consumed without any need to buy cloud infrastructure, and the largest segment of the cloud services market is SaaS, representing 81 percent of all cloud spending.

In other words, a direct purchase of cloud capability represents about 19 percent of cloud purchases by business users.