Investing in the Cloud – Stable Strategy or Simply Hype?

By Richard Bell, VP, Mergers and Acquisitions

US investor confidence in cloud computing remains high. In a recent study by Deloitte and described by GeekWire, venture capitalists ranked cloud computing as the strongest technology investment sector for the third year in a row, narrowly topping their confidence in mobile technology.    

This obviously reads as good news to the cloud computing industry. But less apparent is what this means for service providers. What degree of truth is there in such high confidence? Is it too late to gain traction in an industry that’s already seen high investment levels for several years?

A Valid Investment

As many of us know, a high level of confidence doesn’t always translate into a high probability for success. However, there are significant proof points for validating cloud computing as a solid investment sector.

For example, the cloud is enabling businesses to achieve their goals like never before. Even the most basic IT requirements – like backing up systems and computers – are delivered more efficiently and flexibly through cloud-based solutions like Acronis than traditional on-premises back-up technologies.

Even more telling is that there is still significant room for transformation when you look at the current market size and its expected growth. We are nowhere near the peak of the curve – in fact, the behemoth Amazon owns only 5% of the $99 billion global market today, and we estimate the market will grow to $159 billion within three years.*

So it shouldn’t be a surprise that investors are interested in getting involved during the cloud industry’s early days. Who wouldn’t have liked to invest in IBM or HP back in the ‘60s? Or in Microsoft back in the ’80s? Or Google at the end of the ‘90s?

Don’t Fight the Headwinds – Ride Them

The hype around the market’s potential growth definitely plays to the strengths of our service provider partners and gives them the chance to ride that wave in their own marketing and sales efforts. After all, service providers already offer services that allow businesses to move into the cloud with web and server hosting solutions. If the top two investment sectors are cloud and mobility, a natural opportunity for service providers is to focus on adding more cloud and mobile capabilities to their portfolio of solutions that will appeal to their target customer base.

Overall, the takeaway for service providers is there is still a lot of traction to be had in the cloud – from both an investment and business perspective. Service providers ultimately should take advantage of the buzz around the industry to raise their customers’ interest in the cloud, while encouraging their end users to begin or continue purchasing solutions to benefit from the cloud’s opportunities.  

*Odin SMB Cloud Insights™, 2015

 

Posted on October 5, 2015 and filed under Industry & Market Insights.