Data Center Spending Shrinks as Cloud Grows

December 8, 2010 –The adoption of cloud computing will lead to data center energy expenditures of $16 billion annually by 2015, a 62 percent reduction from the business as usual scenario figure of $25.9 billion, according to new report from Pike Research. “Cloud Computing Energy Efficiency” provides an analysis of energy efficiency benefits of cloud computing and examines the key demand drivers and technical developments related to cloud computing.

Pike Research’s analysis indicates that cloud computing data centers achieve industry-leading rates of efficiency in greenhouse gas emissions and sustainability. Pike finds clouds to be better utilized and less expensive than traditional data centers. As part of its cloud computing adoption scenario, Pike Research forecasts that data centers will consume 139.8 terawatt hours (TWh) of electricity in 2020, a reduction of 31 percent from 201.8 TWh in 2010. The reduction will drive a 28 percent reduction in GHG emissions from 2010 levels.

For competitive reasons, cloud providers are making their data centers as energy efficient as possible. Pike says suppliers of servers, network equipment, disk drives, and cooling and power equipment will increasingly design their products to suit the data center market. A new generation of hardware, software and business processes has the potential to leverage the scale of the cloud and make computing even more energy efficient, according to Pike’s report.

“The growth of cloud computing will have a very significant positive effect on data center energy consumption,” says Pike senior analyst Eric Woods in a statement. “Few, if any, clean technologies have the capability to reduce energy expenditures and GHG production with so little business disruption.”

Pike predicts cloud computing revenue to continue to grow worldwide between now and 2015 at a compound annual growth rate of 28.8 percent, with the market increasing from $46 billion in 2009 to $210.3 billion by 2015.