Why legacy IT vendors are seeking cloud niche viability

Leading hyperscale cloud service providers continue to disrupt the traditional IT infrastructure vendor landscape, as more enterprise CIOs and CTOs expand their adoption of multi-cloud strategies that marginalise the remaining applications for on-premises data centres.

Legacy IT vendors that were reluctant to evolve their business model will now seek niche cloud market segments where they can differentiate their offerings. There’s no viable growth path that’s based upon hardware or software market status-quo assumptions. However, distinctive professional services are still a source of new opportunities.

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Cloud computing market development

The worldwide public cloud services market is projected to grow 17.5 percent in 2019 to total $214.3 billion — that’s up from $182.4 billion in 2018, according to the latest global market study by Gartner.

The fastest-growing market segment will be cloud system infrastructure services, or infrastructure as a service (IaaS), which is forecast to grow 27.5 percent in 2019 to reach $38.9 billion — that’s up from $30.5 billion in 2018.

The second-highest growth rate of 21.8 percent will be achieved by cloud application infrastructure services, or platform as a service (PaaS).

“Cloud services are definitely shaking up the industry,” said Sid Nag, vice president at Gartner. “At Gartner, we know of no vendor or service provider today whose business model offerings and revenue growth are not influenced by the increasing adoption of cloud-first strategies in organisations. What we see now is only the beginning, though.”

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