Cloud Computing Services to Grow to $42 Billion by 2012

Cloud computing services are projected to hit $42 Billion by 2012. It is certainly the hottest buzz word since SAAS. Some even consider SAAS to be Cloud Computing.

It seems there is a land grab for the cloud computing market.

According to Information Week, in three separate announcements, software vendors SAS Institute, NetSuite, and Salesforce (NYSE: CRM).com show they have deepened their commitments to cloud computing.
SAS Institute announced Thursday plans to build a $70 million, 38,000-square-foot cloud computing facility to support expansion of its OnDemand software-as-a-service offerings.

The OnDemand model is what is so attractive for many cloud computing consumers. In a colocation environment there will be committed and unused bandwidth, power, space and server capacity. In the cloud model, the customer only pays for what they use. Currently the household names in the cloud space are Terremark, 3Tera and Amazon, and a few others.

It seems SAS Institute will really attempt to challenge Terremark, 3Tera and Amazon in the cloud space. To build out a 38,000 foot server farm inside a data center is no small task. It also leads to believe they are either going to have a very strong sales and marketing campaign or they already have some of it pre-sold.

Before the cloud concept there was no possible way anyone would attempt to build this data center unless either near a major internet hub or they may have taken over a distressed asset.

Cloud computing has really flattened out the server market where companies in the tier 2 markets or buildings can compete along side the major metropolitan areas and or carrier neutral data centers.

The companies that do well in the cloud market will have the infrastructure and revenue stream in place. Amazon made the most of their infrastructure when they formed the EC2. Salesforce is another great example of a company building to the need when they complimented their hosted CRM software with a true cloud computing offering.

As the economy forces companies to become more creative cloud computing will grow. The Apache Website posted in October 2008 stating, over the next five years, IDC expects spending on IT cloud services to grow almost threefold, reaching $42 billion by 2012 and accounting for 9% of revenues in five key market segments. More important, spending on cloud computing will accelerate throughout the forecast period, capturing 25% of IT spending growth in 2012 and nearly a third of growth the following year.

As companies look to add revenues they will also look to become more efficient. From the service provider side, they will try to look at where they have already sunk costs and maximize them. From the customer side they will try to pay as little as possible only for what they need.

Either way it means the virtual land grab for tech customers is predicted to keep growing by leaps and bounds, so get it while it's hot.