Top 11 Cloud Companies Versus IDC and Gartner estimated market sizes

The purpose of the table below is to estimate very roughly how much business in terms of revenues the cloud  companies collect today. Then I compared these numbers to much publicized IDC $56B per year and Gartner $146B per year. Assumptions:
  • I included top 10 2009 companies, top 15 2010 both from Network World
  • I added new names suggested by contributors to Google cloud computing discussion group (over 40,000 readers) 
  • I added the company  names suggested as comments to my previous blog entry
  • I divided the revenues as "Licenses sales and Services", "Hardware Sales" considered for Oracle only and advertising income, which is key
  • My research for revenues is minimal and I used these simplifications
    • Any cloud company that does not disclose revenues, gets $10M per year default assumption. This is generous for many start-ups, usually struggling with the first millions,and could be an underestimate for some other companies. Overall the number is adequate
    • Google advertising data is from published data
    • Oracle cloud income come from their estimated business on Amazon. and "cloud-in-box" future sales
    • The table does not list other hardware vendors, who also supply cloud service companies: Dell, HP, IBM
    • The table does not include Hadoop and analytics companies, as promising startups, like Cloudera are struggling to find a business model. If we include Cloudera and assign a default $10M in revenues, it will make no difference in final conclusion
Looking at the data, here are some starling conclusions:
  1. The 29 companies listed had revenues in Licenses ad Services just over $10B per year.That is barely 19% of the total market estimate of IDC ($56B per year). As most cloud companies are software and services, the current market size could be, say $15B , but not$ 56B !!!
  2. The discrepancy may be that IDC counted the hardware sold by Dell, IBM, HP, Sun (now Oracle) as part of the cloud market. Thus is a fuzzy assumption, as one does not know for sure, whether the 1,500 boxes Sales Force bought are the part of the cloud market, just 10,000 more servers were sold to other enterprises where we may guess will be used for clouds
  3. The definition of "cloud-in-a-box" will make easier to include the hardware as part of the cloud market
  4. The advertising revenues in cloud market size is 3x larger than software and services revenues
  5. In terms of revenues, Google and Yahoo pocket three quarters of the entire cloud revenues, almost exclusively through advertising and marketing services
  6. 11 companies in the next bullet capture almost 100% of the total revenues.



    • Google
    • YAHOO
    • Salesforce.com
    • Microsoft
    • Oracle
    • Amazon
    • SAVVIS
    • GoGrid
    • NetSuite
    • Rackspace
    • RightScale

    All the other 18 companies share a meager 0.5% of the market :-(
    Not much left over  from cloud sw and service market ?
     The take away is this: we usually call any company providing software and  service for cloud industry. This market is still very small and it is 10% of the total Gartner number including marketing services and add revenues. (Assumed $15B versus $146B per year)
    For all practical purposes, the cloud market for software and services is $15B maximum. This is realistic. This is what we should plan before. Don't base your business plan on market share, but on named customers, say 20, that you know for sure will buy from you once you have the product ready
    As earliest cloud adopters, Google and Yahoo cleaned the bulk of the revenues that go into their pockets comfortably


Revenues (US$ millions per year)

Company Lic & Services Hw Adds Total % Total Cum.
Google 762
23,000 23,762 59% 59%
YAHOO 100
6,000 6,100 15% 74%
Salesforce.com 5,000

5,000 12% 86%
Microsoft 2,000

2,000 5% 91%
Oracle 800 1,000
1,800 4% 96%
Amazon 600

600 1% 97%
SAVVIS 300

300 1% 98%
GoGrid 250

250 1% 99%
NetSuite 200

200 0% 99%
Rackspace 100

100 0% 99%
RightScale 100

100 0% 100%
Enomaly 10

10 0% 100%
Abiquo 10

10 0% 100%
Boom! 10

10 0% 100%
Cloudshare 10

10 0% 100%
Crosscheck Networks 10

10 0% 100%
Elastra 10

10 0% 100%
Egnyte 10

10 0% 100%
Good Data 10

10 0% 100%
Kaevo 10

10 0% 100%
Nasuni 10

10 0% 100%
Navajo Systems 10

10 0% 100%
Symplified 10

10 0% 100%
Terremark Worldwide 10

10 0% 100%
Viewfinity 10

10 0% 100%
Virtual Ark 10

10 0% 100%
VMlogix 10

10 0% 100%
CloudSwitch 10

10 0% 100%
Greenqloud 0

0 0% 100%
T O T A L 10,382 1,000 29,000 40,382








Market Estimate, no advertising IDC 56,000




Market Estimate with Advertising, Gartner


146,000

% 19%

28%




Comments

Commenting here because I couldn't figure out how to fit it in a tweet. I think this is a very interesting analysis that exposes the bloated estimates of the size of the cloud market that you get if you define to many things as being cloud. However, this also misses the point made by me and others that Amazon is leading in this space because of what they are doing, not because they have the most revenue. If you look at this as a disruptive innovation play, then you would expect the disruptor to be doing it at a price point that its competitors cannot operate at, hence it's quite plausible for Amazon to lead the market and be profitable at a lower level of revenue than the dinosaurs who are trying to respond by calling their high $$ enterprise sales "cloud" because that is fashionable.

The reality is that public cloud is the worst nightmare for the big enterprise vendors, since it logically leads to not needing an ITops department (or a CIO), so they would have no-one to sell to except the public cloud providers, who don't need them.

IMHO the end game is that enterprise vendors need to clone AWS, sell it for less and run it better than Amazon to be relevant. So far I don't see that happening. They are doing all the wrong things for the right reasons, listening to their customers and going after the big profits, when the future belongs to people who will never be their customers. Reread the first few pages of The Innovators Dilemma...
Adrian, as usual, your comments are inspiring. In fact this blog is part of the revelation I had when you pointed me to "The Betterness Manifesto,", "The power to pull prosperity" and all are continuations to the Innovators Dilemma.

Quoting Umair Haque in Betterness Manifesto:

"Betterness can't happen if you're spending your life churning out toxic junk. It can only happen when more meaningful work is done. Find a company that's better. Better yet, start one. No, it's not easy. But here's the thing: over the next decade, the businesses that can't do better, the ones you're giving your talent away to, are to go extinct anyway. Cut the cord now, before the axe falls and cuts it for you."

Amazon, Netflix, Google are considered a new breed of companies, the type of companies we should all work for. System Houses line IBM, HP and Oracle seems to look more and more alike each day. So you are right. They need a transformation to survive

Yet, the hardware companies have a great chance to be winners on the cloud msarkets. I predicted this - as opinion - in May 2009 see http://bit.ly/bBTdXe .

Gartner says that now IT departments have more money put aside for cloud computing. But what is cloud computing? The Oracle offer for the "cloud-in-box" is the closest thing to buying a sort of mainframe and call it a cloud. It is simple and it can be handled by the classic data center sales force.

Amazon is a more elegant solution, but it requires inter mediation of 3rd party consultants.

A transformational merger of an Amazon EC2 service with a system hardware company that can place a seeding cloud in the box in each account, to expand later to Amazon.com, this wil be the real leader., IMHO.

When this will happen, the "push-type" companies that make us unhappy today, will become pull companies. This means people will be attracted in an ecosystem of employees, partners, customers and community.
I don't see why AWS would require 3rd party consultants, any more than the rise of Linux in the enterprise did. The developers in enterprises have already started using AWS, the CIOs may not have noticed this yet, but it will hollow out the market from inside, because there is no friction, no barrier to using AWS, you can get started for nothing with no permission needed, and get a bill for a few dollars a month later, and expense it along with buying some textbooks from Amazon.
I hope the usage of public clouds versus private data centers will become mainstream. Right now it is not. Amazon is the undisputed leader for now for public clouds, but it has competition.

IMHO, Amazon needs to make some key acquisitions to assure greater clout and change the way we do IT in the world. For example, here are some wild speculations: What if Google acquires Amazon and makes Jeff Bezos co-CEO? What if Amazon acquires Dell, a move Dell may consider to compete against IBM and HP and Oracle? Dell style of selling on line, a big novelty 10 years ago, is no longer a competitive advantage. In fact Amazon can completely re-vitalize Dell web sales, if combines hardware sales with compute cycles sales.

2 cents

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