Cloud consolidation has been running fast and furious over the past 12 months or so, possibly equaling or even surpassing the frenetic M&A activity of the previous year. But here’s the thing: It ain’t over yet, according to Forrester Research.
In 2015, IBM(IBM) was especially busy, snapping up Gravitant, Blue Box, and Cleversafe to build its cloud computing story. But Hewlett-Packard, Cisco, and Datapipe were also buyers in what seemed to be a nutty round-robin of acquisitions.
Forrester noted that Google (GOOG), which has been trying to sell cloud into big businesses, will only start to show momentum in that market next year. Other players, including well-regarded Digital Ocean and Aliyun, the public cloud backed by Chinese retail giant Alibaba,(BABA) will be challenged to gain share. Overall Forrester expects that by the end of next year, there will be fewer competitors offering public cloud infrastructure, and recommends that business customers standardize on one of the leaders (aka Amazon (AMZN) Web Services or Microsoft (MSFT) Azure).
Those two players in particular are growing because they keep adding new features and functions at a fast clip and otherwise act more like startups than the behemoths they are. And “they benefit from the massive ecosystems they’ve attracted with that innovation,” Forrester said.
In a follow-up interview, Forrester vice president and research director Glenn O’Donnell said Amazon and Microsoft are the leaders in public cloud by far, but for a certain cadre of buyers—Fortune 500 companies especially—IBM remains an important player.
“If you look at big enterprises, you cannot discount IBM,” he said. IBM, in his view, has some good cloud capability but also has that brand which is important to tech decision makers in big companies.
But for the rest of the world weighing cloud deployment, it is critical that buyers make sure their provider of choice—Oracle (ORCL), VMware (VMW), and yes even IBM—has the wherewithal and desire to keep spending on the same sorts of innovation that Amazon and Microsoft roll out continuously.
Forrester’s word to would-be cloud buyers: Abandon tech providers that do not keep up the pace “regardless of your existing investment.”
Those are strong words. Most of legacy IT providers, including the three mentioned above, are hoping that existing customer relationships will carry over into this new era where more business data and applications are moving to shared public cloud infrastructure a la Amazon Web Services and Microsoft Azure.
Forrester analysts also said business customers should pressure cloud providers to start breaking out their cloud revenue, following in AWS’s footsteps. (Amazon started breaking out AWS sales and revenue from its broad e-commerce business last year.)
To which many of us can only say: Amen.
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