Growth of IaaS over the next 12 months “will leave big beasts vulnerable”

With the Infrastructure-as-a-Service (IaaS) market expected to increase by nearly 50 percent in the next 12 months* (according to Gartner), today’s largest market players will be vulnerable to their more nimble and smaller competitors. Their size is also counting against them in the race to innovate ever more flexible and cost effective services for end-users.

Antonio Miguel Ferreira, CEO of Lunacloud explains: “The rate of market growth predicted in the next 12 months would be hard enough for any company to tame. However, the new pay-per-use models and the technology behind IaaS are in constant flux to meet customer demands. This only adds to the problem – the larger you are, the harder it is to stay innovative and provide the latest service models to meet your customers’ needs.”

In such a febrile market, smaller IaaS providers that combine strong financial backing with an innovative IaaS service stand to gain significant market share. Many smaller IaaS providers already offer the ability to scale storage, RAM and CPU on a single server – this entirely custom-made approach is opposed to the more fixed style services that Amazon and Rackspace currently offer.

Beyond a flexible service, it is important to look at where existing IaaS providers have established their infrastructure. New entrants are setting up in regions where their more established competitors have a minimal existing physical footprint compared to their. On issues surrounding data sovereignty, these considerations are becoming important for end-users when selecting their provider. Lunacloud are setting up operations in Southern, Central and North East Europe, outside the most typical locations used by other providers, such as Ireland and Holland.

Antonio continues “If you take a considered look at the largest IaaS providers of today it is only the power of their brand that give them the advantage against their competitors. Their flexibility and pricing does not compare to many providers that have recently entered the market. This is a classic warning sign that a market shake-up is overdue and probably immanent.”
A third consideration is the growth in developing markets. By far the largest growth in IT spend over the next 12 months will be seen in China. Rapid expansion in developing countries can expect to overturn many market leaders whose current market position may seem unassailable.

Antonio concludes “Taking all of these factors together, the next 12-months could well be a rocky one for established cloud providers. There are a lot of hungry new players in the IaaS industry who have an equally keen eye on the latest ways of delivering IT-as-a-service. We can expect to see a lot of change in the near future”.

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