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Cloud Computing: Vendor Churn Complicates Cloud Landscape

first_imgCloud computing is currently experiencing phenomenal growth, and by some estimates, the growth rate in the cloud market  is four to five times higher than the growth of spending on traditional software.  IDC estimates that this year cloud service revenues will exceed $36 billion, up over 28 percent from last year.  About two-thirds of that is spending on SaaS and one quarter is on infrastructure or IaaS.While overall the cloud market is robust, many vendors are finding the new IT landscape in the cloud to be a challenging one, particularly existing vendors.  Competition is fierce as the market is awash in startups and new vendors.  Migrating to the cloud is also requiring many vendors to retool and rewrite much of their existing software.  Vendors are finding that they also need to retrain and restaff in order to acquire the right talent and skill sets for effectively developing for and deploying to the cloud.  And a further complication for existing vendors is a reluctance to move to the cloud because of a worry of the potential that a cloud version of their product could cannibalize their existing business with lower pricing.Vendor challenges are likely to equate to customer headaches.  IDC estimates that 30 percent of today’s cloud vendors will be out of business by 2015.  The IDC report says this is likely because the cloud market “is a relatively new one with many players entering and leaving the playing field. Therefore, it is imperative for CIOs to ensure due diligence when selecting a cloud service provider.”Chris Morris, vice president at IDC for for Asia/Pacific cloud services and computing research, told SearchColudProvider.com that “those 30% [of vendors] which fall from view will likely be replaced by at least that many new entrants. So for the CIO and any vendor managing an ecosystem of partners, managing the market churn will be onerous.”last_img

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