Private Cloud Will Drive the Bulk of Revenue in the Datacenter (sorry Amazon)

January 2nd, 2011 by Jim Kaskade

Lets take the most recent IDC report on server sales into private versus public cloud infrastructure. This is a reasonable “relative” and accurate indicator of private vs. public (not absolute revenue numbers). In other words, how many servers are being purchased by big enterprises to power their internal data centers versus how many servers are being purchased to power external public on-demand infrastructure? The truth in spend is definitely interesting.

If I were a new startup or a new line of business, I’d definitely consider the fact that in 2010, the ratio of new systems being sold to build/power for private vs. public was better than 5 to 1. The private cloud server revenue is forecast to grow at 17% CAGR to $5.7B in 2014, and the public cloud server revenue at 4.3% CAGR to $718M. Where would you want to place your bet?

When talking with Frank Gens at IDC, we attempted to get an understanding of how the market will evolve in three segments:

Private Cloud: On-premise, automated data center infrastructure
Virtual Private Cloud: Off-premise, dedicated, single-tenant, managed services
Public Cloud: Off-premise, multi-tenant

Here’s a rough crystal ball in terms of these three important categories.

Again, I’d prefer to spend my money in the Private Cloud arena. Only issue with this….it will require that you know how to sell into large enterprise….not the small to medium sized businesses or the long-tail.

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