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In 2014, it's safe to say the cloud went mainstream -- even actress Jennifer Lawrence was talking (or complaining) about it. But it was also a year of major surprises. We asked a diverse group of expert cloud watchers from IDC, Forrester, Synergy and Techaisle to share what they weren't expecting to see this year. And we were, uh, surprised by some of their answers.
Where were the price drops? Larry Carvalho, research manager of PaaS at IDC, said he was expecting cloud platform prices to continue their downward trend in 2014, and much to his surprise, they didn't. Instead of cutting prices, cloud providers opted to largely differentiate themselves based on services. That's not to say that cloud computing is not still a bargain because prices aren't going up, but Carvalho saw surprising price stability in 2014.
Microsoft Azure is on fire. Revenues from Microsoft's cloud platform have grown 130% over the past year, according to John Dindsdale, chief analyst and managing director of Synergy Research Group. He said all the market leaders are growing quickly but the pace of Microsoft's growth was something he was not expecting. "This has been impressive and surprising," Dindsdale said. "It's a result of a clear and obvious corporate focus on cloud, backed up by a heavy investment." Others agree with Dindsdale. "Microsoft is moving toward being a very open software company, not just a Windows-only company," IDC's Carvalho said. "These are changes we would not have expected to see from Microsoft in the past."
Don't just save money, make money. This was the year the cloud stopped being simply a cost-saving choice and started being a way to grow the business, said Techaisle's founder Anurag Agrawal. "Companies are now using the cloud to increase growth by improving marketing, acquiring new customers and expanding in to new markets," he said. A Techaisle survey showed almost 80% of small and medium businesses (SMBs) reported the cloud improved their topline revenue instead of just boosting their bottom line. Thanks to a huge growth in applications and services, "the cloud can now provide these companies with the means for agile growth," Agrawal said.
Rackspace is still looking for love. The biggest shock in 2014 for Forrester's vice president James Staten's was the fact that Rackspace was not acquired. Given the company's sluggish growth compared to Microsoft, he felt sure someone would scoop them up. He feels certain it will happen in 2015 though. "They're not going to be sold because they're a managed services company but because they're a cloud company," Staten said.
And the Telcos are where? Telecom providers, while not exactly absent in the cloud market, continued to remain way behind the cloud specialists in 2014, Synergy's Dinsdale said. He pointed to their general lack of agility, flexibility and cloud credibility as the reasons why they didn't make much of a dent in the cloud provider market.
One size does not fit all. Despite the huge growth in the cloud market in 2014, Forrester's Staten saw companies putting more thought into just what belongs in the cloud, and exactly what type of cloud. "This was the year when we started to recognize that not just everything should go on a cloud; just the right things should go on a cloud," he said. Along with that came a sharp rise in hybrid clouds, driven in part by companies wanting to be able to choose their level of control, he said.
Enterprise resistance is, apparently, futile. Despite skepticism, security concerns and a deep-seated unease about anything not "on prem," AWS and Azure gained a lot of enterprise traction this year, Synergy's Dindsdale observed. Google has also made strides in this area. That's good news for CIOs, he said, and for analysts like himself who never want to hear anyone again suggesting the cloud is not relevant to large enterprises or security conscious IT folks.
And the real cloud decision makers were … not IT managers apparently, at least when it came to software as a service (SaaS) in 2014, said Techaisle's Agrawal. The company's survey showed 70% of SMB's SaaS purchases were made by "business decision makers" and not IT folks. He said that number is just going to get larger in 2015.
Unsettled times in the open source arena. Forrester's Staten said 2014 has been a strange year for OpenStack and the open source space in general. Despite some revenue and customer wins, "let's not be too quick to declare victory," he said. OpenStack continued to be unable to develop and implement as quickly as the market leaders. The evolution of Cloud Foundry also muddied the open source waters, he said. Even though it's early days, he is afraid the market may already be "forking" over compatibility and other code issues, none of which is going to make open source adoption more popular going forward.
About the author:
Valerie Rice Silverthorne is a writer and editor with nearly thirty years of experience covering business, trade, technology, real estate and lifestyle trends. She was an award-winning business writer for The San Jose Mercury News and was a Forbes Magazine top "30 under 30" journalist. She was the editor of ZDNet.com, PC Week/Inside, and a senior executive editor of PC Week and Electronic Business. She works as a freelancer writer from her home in Amesbury, Mass. Contact her at email@example.com.