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Hosted private cloud services business to surpass US$24bn by 2016

Hosted private cloud services business to surpass US$24bn by 2016

Hosted private cloud services business to surpass US$24bn by 2016
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Hosted private cloud services business to surpass US$24bn by 2016

Global spending on hosted private cloud services will be more than US$24bn by 2016, IDC has predicted. The sector will grow at a compound annual rate of 50pc a year over the next four years.

IDC says that along the way, hosted private cloud (HPC) services will become the backbone of a new set of infrastructure services, transforming existing provider models for IT outsourcing, hosting infrastructure services, and other key IT industries.

Private cloud services are designed for a single enterprise and have user-defined and controlled restrictions on access and level of resource dedication.

Hosted private cloud is a composite view of two private cloud services deployment models, both of which offer customers and providers different choices about resource dedication, tenancy cost, user access/control of the computing asset, and real and perceived security structures in place.

Deployment models for hosted private cloud

IDC says there are two key deployment models for HPC: dedicated private cloud and virtual private cloud. Dedicated private cloud offers dedicated 1:1 physical compute and storage resources focused on the needs of one enterprise or extended enterprise. This model offers the greatest customer control over their contracted resource. Examples of dedicated private cloud service offerings include Amazon EC2 Dedicated Instances, IBM SmartCloud Enterprise, Savvis Symphony Dedicated, and Rackspace Cloud: Private Edition.

Virtual private cloud is an adjunct of public cloud services with shared virtualised resources and a range of customer control and security options distinct from most public cloud services. Examples of virtual private cloud service offerings include Amazon Virtual Private Cloud (VPC), IBM SmartCloud Enterprise Plus, Savvis Symphony VPDC/Open, and Rackspace RackConnect.

“IDC anticipates that virtual private cloud will be the predominant operational model for companies wanting to take advantage of the speed and lower capital costs associated with cloud computing while cloud service providers will welcome the move away from the expense of dedicated 1:1 physical systems for delivering their business process and data centre outsourcing and other services,” said Robert Mahowald, research president for SaaS and Cloud Services at IDC.

The private cloud market up until 2016

Virtual private cloud is expected to make steady gains in part because of its similarity to public cloud, particularly public Infrastructure as a Service (IaaS), which many IT buyers are already using as a cost-saving alternative to replacing ageing infrastructure.

As more companies evaluate their Platform as a Service (PaaS) and Software as a Service (SaaS) options, the need to centralise the management of all cloud-sourced capabilities will become apparent. Meanwhile, the majority of dedicated private cloud buyers will be those companies with existing IT outsourcing or hosted infrastructure services contracts.

Potential buyers of dedicated private cloud services will place a premium on off loading the asset management burden and on operational reliability, over and above other cloud features, such as scalability, granular billing, and customer self-service.

When dedicated private cloud grows, the winners are likely to be large incumbent packaged software providers and equipment providers, global systems integrators, professional services firms, and telecommunications service providers.

These providers are working mightily to build single-vendor stacks, providing all the underlying components, from bare metal to ‘ trusted partner applications’. But if virtual private cloud becomes the dominant provider-based model, as IDC expects, it will be more like a public cloud model with mostly standardised, virtually dedicated assets, which means a vastly different set of vendors will benefit.

“Not even the largest technology incumbents can sustain IT market leadership without achieving leadership in cloud services,” Mahowald said.

“Quite simply, vendor failure in cloud services will mean stagnation. Vendors need to be doing everything they can, today, to develop a full range of competitive cloud offerings and operating models optimised around those offerings.”

Read more about Ergo's Cloud Services Here

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