Wednesday, July 3, 2013

The Economics Behind Cloud Services


The potential earnings for Cloud Computing is a staggering $240 Billion in 2020! You might think that this is a bit too premature and overrated, but it is the most accurate money generation prediction for Cloud Computing. A survey was able to predict this based on leading countries that use this software and what the future market sales would be. Another team was able to predict that by 2014 Cloud Computing would reach about $55 Billion. IDC (International Data Corporation) research shows that profits for Cloud Computing will have a gradual but steady rise and will also create numerous job opportunities.


On average the most frequently used cloud is the Private Cloud and 62% of all IT leaders are planning on using cloud computing for most procedures, while 21% admitted that their operations are limited to Software as a Service (SaaS), another 9% are only using Private Cloud, while another 9% mentioned that their use of Cloud Computing is minor and, 5% of those in the study stated that they had no idea what to use.

The exact economic workings around Cloud Computing is not very clear at the moment as Cloud Computing can be easily accessed via any electronic device that is connected to the internet. Almost 70% of America has already used Cloud Computing (E-Mail which is web-based being the most popular form). The “on-premise” operating system (The OS which is already installed on the device) is compatible with the “cloud” operating system. In simple terms this means office software files (spreadsheets, word processors, and presentation software) created 'on-premises' can be shortened on the cloud system as well, and vice versa. These files that are edited are continuously being synced between the on-premise surroundings and the cloud system.

The platform market is affected by many aspects, however there some which affect more than others:
  • Changes made to the network, and the possibility of Cloud Computing being separated into two markets
  • Operating systems that have well established applications on precise markets had very strong effects on the network
  • An indirect network effect which is an operating network that has access to a number of applications. (Data that is portable in app software programs are transferred across operating systems)

The Cloud Computing markets are greatly affected by a few leading companies. The chance of this market being turned into a battle of two giants depends on the creation of appealing software to consumers. Vertical integration between the consumers of the tool is quite high to enable maximum performance. If the cloud will provide only the infrastructure then a need for a two-sided market is high to balance the process. If this is the case then the platform owner charges the software developers a fee to provide their product/service through the owners cloud. This fee primarily depends on the level of quality required and the number of users.

Depending on how you want to use the software the pricing information will change. The license given for this software is valid until the user of the license decides to terminate it. Another compelling fact for those interested is that Cloud software can be rented if you choose not to purchase it! This provides an excellent chance for those who want to try it out before investing in the system long term.

As we can see Cloud computing is well on its way to making quite an impact in the market. There are companies that are already making money on this software and will continue to do so based on the growing demand. Research shows that this is sure to increase market sales and become a global giant! Any company (whether it is large scale or small) can benefit from this system. So why not you?