|By Jeremy Geelan||
|April 15, 2013 08:00 AM EDT||
RW Baird & Co. is projecting $10 billion in revenue for Amazon Web Services (AWS) by 2016. As Alex Williams of TechCrunch puts it, "The estimates reflect Wall Street’s growing confidence in cloud services and the need that analysts see in letting their customers know that a shift is underway that will lead to continued flat revenues or even losses for enterprise companies and systems integrators."
Baird states in its report, as Williams notes, that the Top Ten cloud providers grew 37% while more traditional technology companies grew by only 2%.
The November 14 BusinessWeek cover that helped publicize AWS in 2006
To quote Willams:
"Baird Analyst Steve Ashley, quoted in the AWS report, 'views client/server vendors like… SAP and BMC as most likely disintermediated, and SaaS companies like Salesforce, Concur, and cloud infrastructure vendors like Citrix and Red Hat as beneficiaries of the shift towards cloud computing.' The former are large, powerful companies that have built core businesses critical to IT. How these companies adapt is still a big question."
Williams also notes that according to Baird, HP and Dell "have the potential to be most disrupted" and that EMC, VMware and NetApp also face exposure.
When customers start using AWS, Wiliams explains, they stop buying storage and networking equipment.
"That certainly is a factor," Williams muses, "but data is so deeply embedded into these systems that analytics will give these players value over time."
Here's the key graphic from the RW Baird report
Williams, who has consistently been one of TechCrunch's most thoughtful, insightful and diligent writers, concludes:
"At its core, AWS is complex due to the additional technologies needed to make an app or service truly robust. But still, customers start with AWS and often remain loyal. In turn, AWS has become an ecosystem for developers. Ask about a startup’s infrastructure and the founder will often say they run it on AWS. But AWS is not the only game in town and it still has not proven that it can provide the deep infrastructure that the enterprise requires. It’s a 10-year cycle that is underway that will keep a lot of infrastructure intact, on-premise."
The unfolding development of the IT infrastructure industry is one that of course Cloud Computing Journal will continue to cover 24x7.