Market Monitor, a service of 451 Research, projects that the cloud-enabling technologies market revenue will increase at a 21% compound annual growth rate (CAGR) to reach $22.6 billion in 2016.
The recently published Market Monitor Cloud-Enabling Technologies overview report defines Cloud-Enabling Technologies as technologies that are installed, delivered and consumed on-premises. The report examines 143 vendors, segmented into three primary categories – virtualization, security, and automation and management. Cloud-Enabling Technologies, by definition, are not hosted by third parties. A report overview can be viewed here.
Full report highlights include:
Virtualization — the foundation of cloud computing — accounts for the majority of total market revenue, with a 66% share. But, as the most mature market segment, it also has the lowest CAGR through 2016 (16%).
Automation and Management, a broad category that includes incumbent technologies and cloud platforms, will continue to grow at a healthy 28% CAGR as users move up the stack from first-tier virtualization implementation.
At the top of the stack is security, with no single vendor dominating. This sector has the highest CAGR through 2016 at 29%.
Since September 2012, there have been 12 significant acquisitions in the CET space. Going forward, we expect to see more of the same as firms look to either bulk up their cloud offerings or make an initial 'roll of the dice' in the cloud market.
Revenue generated by public firms accounted for 87% of the total, with private firms accounting for the remaining 13%.
Public vendors accounted for 21% of the total companies in the CET space, with private vendors accounting for 79%.
A smaller percentage of companies are generating less than $5m in revenue than the year before: nearly half of the vendors in 2012 generated less than $5m in revenue (44%), compared with 58% in 2011. Roughly one-third of vendors fall into the midmarket range (defined as $5m-$25m), up from 27% in the midmarket the year before. Only six vendors have revenue (deriving strictly from CET) over $500m.
"The drivers of growth are twofold," said Victoria Simons, research analyst, 451 Research. "Initial adoption of the cloud is driven by the need for cost reduction and more efficient computing options. As the infrastructure is virtualized, customers then need tools to manage, control and secure their IT environments to fully realize the benefits of virtual/cloud environments. We see the cloud-enabling technologies market growing strongly as large enterprises and SMBs continue along the path of flexible computing."
Leveraging 451 Research's deep insight into established cloud vendors and startups, Market Monitor employs a pure bottom-up approach, with active participation from sector analysts. The resulting forecast incorporates the unique traits, strengths and weaknesses of each market participant, and when used with in-depth qualitative research from 451 Research, Market Monitor provides a holistic view of the cloud computing marketplace. This bottom-up analysis methodology enables 451 Research to provide granular detail at the vendor and individual service level.