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IDC: 30% of cloud providers will go out of business by 2015

This is one of the conclusions in a study by the Asia-Pacific branch of the research firm, IDC. The IDC analysts pointed out that after five years of the cloud’s growing popularity, many real examples of its business benefits these solutions bring are noticeable. Cloud computing services and technology are no longer used only to replace outdated and costly traditional infrastructure, but it will evolve and mature over the next few years.



However, because of the number of service vendors, IDC says that about 30% of providers currently operating in the cloud market will go out of business by the year 2015. This is a relatively new market with many players entering and leaving it, and the number will be naturally reduced. Consolidation in this market should not be surprising as in any other. Therefore, selecting a cloud computing provider, CIOs consider due diligence.


Comparing the cloud services market in 2012 with that of 2011, it is clear that over the last 12 months, significant changes took place in the way they are adapted in organizations. In 2011, the cloud was seen as a very efficient cost-effective way to replace the aging existing infrastructure or IT development. But in 2012 the cloud gained an additional feature – it became a marketplace of corporate and business IT services for the both - IT departments and managers of different LOB.


The research showed that consolidation will be a universal phenomenon - occurring globally. Competition is large and the market is relatively small. For a start-up, cash flows with star-up expenses and research and development costs may be slow, particularly in new markets where the public cloud approach is more cautious. For an experienced software vendor, who has regular revenue from traditional licensing, the transition from license based model to license subscription based can also be difficult, as it requires to “consume” a the part of its own business.  


Some will fluctuate for business reasons, while others who choose business niche based on vertical or horizontal business processes will seek to be taken over by some larger such as IBM, Oracle, etc.


But the 30% who do not opt for the consolidation will likely to be replaced by at least the same number of new players, making the work CIO or service vendor managing ecosystem of partners even more difficult.