In some respects, the cloud computing market arrived in a big way in 2008. Amazon, EMC/VMware, IBM, Google, Microsoft, Salesforce, and a dozen other vendors introduced products and services for on-demand, pay-as-you-go computing.
In other ways, however, cloud computing is still nascent. Google's "platform as a service" App Engine is only in preview mode, Microsoft's Azure Platform Services have yet to be delivered, and Oracle and SAP are watching and waiting from the sidelines. In addition, businesses adopting cloud services are still in the minority, as IT pros mull the security risks, governance implications, and data-integration challenges of this new IT delivery model.
What happens next? Despite the economic recession, new players will emerge as cloud service providers and, because of the recession, IT departments will plug into cloud services as a way of "doing more with less." Some of the issues associated with cloud computing will fade into the background, while others will be pushed to the forefront. Following are my predictions for what's ahead in 2009.
1. The Cloud Market Will Grow Steadily.
Cloud computing growth will exceed 20%. That number is an educated guess, not the result of market research, but the important point is that the cloud market will grow at a healthy rate -- 10%, 20%, 30%, or more -- while enterprise software, hardware, and other segments of the IT market are hard pressed to grow at all. In two recent examples, Amazon's nonretail business, which includes Amazon Web Services, grew 45% in the third quarter of 2008, while Salesforce's revenue in the third fiscal quarter climbed 43%. Cloud services will appeal to budget-restrained IT departments looking for ways to deliver new applications without investing in new software and servers.
2. Google Will Remain A Niche Player.
Google App Engine is an interesting new alternative for developers looking for ways to build and deploy Web applications, but it will appeal mainly to startups, Web 2.0 companies, and other small businesses. Typical of the companies using App Engine are BuddyPoke, which lets users create 3-D avatars, and Pixverse, a developer of Web chat and other social media apps. Google Docs (software as a service) and Google App Engine (platform as a service) may eventually gain popularity among larger companies, but for the foreseeable future they will remain disruptive-but-niche solutions in the enterprise.
3. Service Outages Will Be More Frequent, But Less Disruptive.
When Amazon's Simple Storage Service crashed for two hours in February 2008, then for eight hours in July, S3-based Web applications suffered related outages. As more companies sign up for cloud services in 2009, two things will happen. First, the added workload will cause more cloud failures like those experienced by Amazon. And second, cloud users will be better prepared. Having learned their lessons, IT pros will devise backup plans and recovery scenarios so that their applications don't fail when the cloud does.