April 27, 2011 – The cloud computing market will grow by nearly six-times its current level, to $241 billion in 2020, through a mix of interest, adoption and abundance in as-a-service offerings, according to new research from Forrester.

In the 27-page report, “Sizing the Cloud,” Forrester culled market estimations from its business-to-business forecasting model for public, private and virtualized private clouds during the next decade. Authors Stefan Ried and Holger Kisker, vendor strategy professionals with Forrester, relied on the research company’s cloud taxonomy and information on 12 market segments for the report.

While the overall cloud market is expected to expand greatly from 2011’s anticipated $40.7 billion level, niche provider areas and services will experience saturation within five years, Forrester reported. Infrastructure as a service will top out at about $5.9 billion in global revenues by 2014 due to a mix of commoditization, price deterioration and margin pressure. IaaS currently represents the second-largest public cloud market space, behind SaaS, but the success of Rackspace and Amazon’s EC2 will ramp up IaaS offerings.

High demand for SaaS is expected to be the biggest portion of the cloud and virtualization market, with Forrester putting SaaS revenues at $92.8 billion by 2016, which would represent 26 percent of the total packaged software market. Revenue returns will slow from that point to 2020, though will trickle down to interest and growth in IaaS and platform as a service reliance.

Market gains in avenues such as business process as a service will be “modest,” but will also cover more industry-specific and specialty service ventures, according to researchers Ried and Kisker.

The three main long-term business factors that Forrester sees pushing cloud growth are the savvy and expectations of the coming generation of knowledge workers, persistently volatile economies that threaten in-house IT development, and a shift in the ways enterprises leverage new solutions.

“Cloud computing will be a core enabler of many of these new solutions, as it makes using these new technologies much cheaper and more efficient,” Ried and Kisker stated in the report.

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