Hosted private cloud services spend to skyrocket

Summary:Worldwide spending on HPC services will surpass $24 billion in 2016, according to IDC.

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Worldwide spending on hosted private cloud services will total more than $24 billion in 2016, according to new predictions by market research firm IDC.

That's a compound annual growth rate of more than 50 percent.

The driving reason for such growth? Simple: companies (and their IT organizations) are looking to the cloud as a way to scale services cheaply. 

All clouds are not created equal, though. Public cloud services are open to a largely unrestricted group of potential users, while private cloud services are intended for a single enterprise, and accordingly have controls and restrictions on access in place.

In the hosted private cloud segment, there are two options: the "dedicated private cloud," so-named for its 1:1 physical compute that focuses resources on a single enterprise, and the "virtual private cloud," which shares virtualized resources in a public-like way. (Examples of the former: Amazon EC2 Dedicated; IBM SmartCloud Enterprise, Rackspace Cloud: Private; examples of the latter: Amazon VPC, IBM SmartCloud Enterprise Plus, Rackspace RackConnect.)

According to IDC, it's the virtual private cloud model that will dominate future growth, thanks to the speed and the low capital costs it offers. In other words, it adapts the advantages of a public cloud for private use -- not a bad thing when companies are increasingly looking to as-a-service options (infrastructure, platform, software, etc.) to save money.

With that said, the majority of dedicated private cloud buyers are expected to be companies with existing outsourcing or hosted contracts; for this group, there is a focus on "off-loading the asset management burden and on operational reliability, over and above other cloud features such as scalability, granular billing, and customer self-service," IDC says. Large incumbent packaged software providers and others stand to benefit as they pursue single-vendor stacks.

But growth in the virtual group turns those tables.

"Not even the largest technology incumbents can sustain IT market leadership without achieving leadership in cloud services," IDC's Robert Mahowald warns. "Quite simply, vendor failure in cloud services will mean stagnation."

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Topics: Cloud

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Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. He is also the former editor of SmartPlanet, ZDNet's sister site about innovation. He writes about business, technology and design now but used to cover finance, fashion and culture. He was an intern at Money, Men's Vogue, Popular Mechanics and the New York Daily Ne... Full Bio

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