Cloud Market Over Estimates are Sky High

Move over Mary Meeker - another Merchant Bank looks like its set to take the Optimistic Overpromotion Crown - Read Write Web:

......we have to wonder about the estimates from Merrill Lynch, which is estimating the cloud computing market to reach $160 billion by 2011.The estimate includes $95 billion in business and productivity applications.

This beats the previous record by Gartner, of $150bn by 2013

One sometimes has to laugh about the estimates by the "Analysis" companies and the Merchant Banks. What they all by and large have is a database with the basic IT components and their estimated growth over N years based on various factor assumptions, by country, by sector etc. They then re-group these component bits together and re-brand them whenever a new "New Thing" like SOA or SaaS or Cloud Computing hits the Hype Curve (pouring the same old wine into new hype bottles). Thus the market forecast for Tech A (Virtualisation, say) moves seamlessly from SOA to SaaS to Cloud, and they make (ever changing) estimates of penetration.

The aim, typically, is to flatter and deceive. Very seldom are the early estimates under-declared, usually (well, nearly always) the early estimates are massively over-egged and then are scaled back as the newly hyped area doesn't quite make it. Mobile is usually the worst.

The game continues in ever increasing cycles over time.......when the whole "New ASP" (remember Application Service Provision - it was the Word 1.0 for Cloud) game started in c 2004 the memory of the abject failure of ASP kept the estimates still "respectably" low. Looking at past Gartner, Forrester reports etc I have, SaaS was to be a $20 - 40bn game (ASP was a $20 - $40bn game at its most breathless). SOA later was to be a c $60- 90 bn game (depending on who/when the report is from) but the inflation of each cycle goes up, till we get into the Clouds.

And each time a new term is coined, the old term's stuff is quietly shifted over. Never clearly of course, so its always difficult to sort out what is which, when.

And each time they fail to live up to promises, and each time its due to the same reason too - its very hard to:

- provision server side software reliably enough for enterprises' critical applications
- persuade them that their data is secure
- design systems flexible enough for every enterprise's different needs

So each time, after some fairly non critical stuff is "Clouded out" it stops there. Then there is the inevitable Large F*ck Up or Service Level Argument or attempt to extort an above market annual maintenance agreement increase, and the enterprise CIO makes a strategic decision to take it back in house.

That's the same CIO that the next saleperson is trying to persuade to let it all hang out in the Cloud, by the way......


For the record, $160bn is about 12% of the total ICT marketplace excluding pure comms and (a movable figure, for sure, but its of the order of $1.3 trillion), so do we really believe Cloud will go from zero to c 12% in about, oh, 2 years - given its still relatively tiny today, 2 years in?