Revenue for Cloud Storage to Rise to $5.8 Billion by 2013, From $487 Million in 2008

An estimated 1.6 billion people now use the Internet, according to Advanced Micro Devices Inc., every last one a potential subscriber to cloud computing services. But can cloud computing overcome concerns regarding security, functionality and availability to achieve its vast potential? As the Internet moves into the era of dynamic, user-generated and alterable content, the acceptance of cloud computing will rise, according to iSuppli Corp.

"The cloud," is a modern phrase for the online world, describing a system that allows content or services to be accessed from the Internet using devices located anywhere in the world. Such devices include PCs, mobile phones and video game consoles. iSuppli defines cloud computing as the provision of a service to a user, beyond simple file storage, a feature known as cloud storage. Such cloud-computing services integrate a number of features and functions controlled by users, such that at the end of the activity, by employing the application or service, the user has solved a problem, or created, modified, enhanced and/or saved a file. iSuppli believes that as cloud computing evolves, the definition will evolve.

Cloud computing services had their genesis in the business world, allowing the use of information and data to be shared with employees regardless of physical location, and updated when needed. But in the consumer market, such services are new, and currently growing in number and popularity.

An example of a well-liked business-focused cloud computing application is Google Docs, an online program that allows users to create, save, and store word processing, spreadsheet and presentation files. A popular consumer-focused cloud storage application is Flickr, the online photo storage service.

"Social networking websites blur the line between cloud computing and cloud storage, because they offer a variety of services, including online storage, blogging, contact networking and instant- and non-instant messaging," said Matthew Wilkins, principal analyst, compute platforms, for iSuppli. "However, when consumers and businesses consider the use of cloud computing, they harbor legitimate concerns in the areas of security, functionality and availability."

Security issues take the form of controlling access to the application and its files. Functionality centers on exactly what tasks users are able to accomplish with an application. Availability issues concern the minimization of downtime, because an online service is non-existent when offline.

Where functionality is similar or the same, online applications compete with offline applications, whereby an offline application competes directly with a particular PC application. For example, Google Docs compares to Microsoft Office. Ironically, the primary enabler for consumer cloud computing services’Internet bandwidth’ is also the primary inhibitor, as it almost completely dictates the type of cloud application the user can run. Despite concerns and inhibitors, cloud computing holds strong promise for global Internet users, iSuppli believes.
 
Clouds over cloud storage
While cloud computing holds strong potential, the sky has become partly cloudy for the distinct but related area of cloud storage.
For small and medium businesses, cloud storage offers an attractive way to save valuable digital data, doubling as a storage server and a backup system. With cloud storage, there is no need to maintain a RAID based server, to rebuild and replace hard drives or to run maintenance and diagnostics when glitches occur.

For consumers, cloud storage represents a new way to back up data, especially family photos, music and other critical data.
Among corporate road warriors, cloud storage is a major technique to share common files over the net and work on a collaborative basis with other employees in a company.

Last, but not least, cloud storage enables users to buy value notebooks that come with limited storage.

However, the atmosphere for cloud storage has become somewhat chillier during the last 12 months. "During the past year, the economic recession has led to a shrinkage of available amount of excess capacity in data centers that could be leased out for use as cloud storage," noted Krishna Chander, senior analyst, storage devices, for iSuppli.

News has circulated that Yahoo and Hewlett-Packard are pulling out of the online storage market. On the other hand, amidst these pull outs, the previously rumored news that Google may enter this market with its G-Drive has reemerged.

Beyond the economic downturn, another factor is slowing demand for cloud computing: the abundance of external storage solutions that can be attached to their PCs using USB interfaces. External hard drives ranging in capacities of 250Gbyte to 2Tbyte are available from retail stores and e-tailers and are priced attractively around 10 cents per gigabyte. Given this alternate option, consumers are more hesitant to adopt an online storage scheme. This raises a question: should Google continue to be developing its G-Drive strategy?

The potential revenue for Cloud Storage is estimated to rise to about $5.8 billion by 2013, climbing steadily at a pace of about 64 percent from $487 million in 2008. However, if consumers take the external storage alternative, cloud storage revenue will amount to only half that level by 2013.

The total number of worldwide users for online storage could rise to about 729 million in 2013. However, if there is a greater uptake of external storage, the user population will amount to only about 445 million in 2013, down about 40 percent from the more optimistic outlook.

"Service providers need to come up with creative ideas to entice new consumers to stay or to renew their cloud storage subscriptions," Chander added.