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Cloud computing worth USD160bn by 2011

Thu Nov 26 2009, 12:33 PM UTC

Revenue from cloud computing is set to hit USD160bn by 2011, including USD95bn in business and productivity apps, according to analysts at Merrill Lynch. The forecast suggests cloud computing, which is still in its infancy, will be one of the fastest-growing markets in the world.

A number of analysts expect cloud computing to experience strong growth, but Merrill's forecast is one of the highest yet. Earlier this year, Gartner pegged the market at USD150bn by 2013, but included ad revenue from agencies such as Google AdWords in its estimates. Gartner says cloud computing will be worth a mere USD7.5bn this year. IDC forecasts year-on-year growth of 26% for the next four years, but expects the industry to be worth just USD44.2bn by 2013, up from USD17.2bn this year.

IDC expects cloud computing to grow at six times the rate of the traditional IT sector, and large companies are racing to pump money into the burgeoning market. Google is currently leading the charge to create cloud versions of business software, having recently signed high profile deals with Rentokil and the Los Angeles council. Google is also developing its Chrome operating system, designed for web-connected devices that do most of their computing via online tools. By banking on the cloud computing trend, Google is hoping it can become an influential force in computing as well as in search and advertising.

Google will face stiff competition from rivals including Microsoft, Amazon and IBM, and will need to address perceived risks with cloud storage. Tech analyst Rob Enderle tells StrategyEye that security is the big issue facing the industry at the moment. "To meet cost objectives security really can't be assured because the system is dramatically more dynamic. It’s a problem with all cloud services, not just with Google," he says. "Security breaches are the big exposure, and that is likely to remain."