back to article Who's laughing now, doubters? Cloud makers rake in £75bn in sales

Global cloud revenues jumped 28 per cent year-on-year to reach $110bn (£75bn) in the 12 months to September 2015. Totting up the numbers is Synergy Research, which tracks vendor revenues in six cloud services and infrastructure areas. These are: Public IaaS/PaaS, Private and Hybrid, SaaS, UCaaS, Public Cloud, Private Cloud. …

  1. A Non e-mouse Silver badge

    Profit

    Yeah, £75bn is sales does sound impressive. But what really counts is: What's the profit? That's what the money people really care about. Your £75bn is pointless if you're making naff all profit (or even a loss!)

    1. Lusty

      Re: Profit

      Normally revenue figures are a good thing because they represent huge employment. FoxConn for instance don't have to make a profit to be "good" because they employ a small nations worth of people who would otherwise not have a job.

      Unfortunately cloud only needs 5 people so that's not the case here.

    2. Anonymous Coward
      Anonymous Coward

      Re: Profit

      It appears they are including public and private cloud, meaning everything in IT. The give away is that HP and Cisco are leaders, but they have no cloud services... just slapping a piece of tape with 'cloud' written on it on a server.... It appears that AWS and Microsoft Azure, not so much the rest, are growing rapidly though. Quickly becoming a two horse race.

      1. Lusty

        Re: Profit

        Microsoft starting Azure made it a two horse race. I have yet to see a third serious option. Google don't seem to have any interest in a general purpose cloud but otherwise would probably have been option 3 by now. In theory IBM/Oracle are options but skewed so massively to their customer and technology base as to be no use to most people but I can certainly see MainFrame As A Service (ZaaS?) being a long term thing so that people can do hybrid architecture clouds with both architectures being not on premises.

  2. Anonymous Coward
    Anonymous Coward

    Cloud pricing

    is very predatory.

    A race to the bottom to get market share (where have we seen that before eh?)

    is not sustainable in the long run.

    Before long, the shareholders will start to demand payback. What then to all those companies suckered into the 'hey look how cheap we are' honey trap eh?

    There will be blood and a lot of it. Some customers may find them going to the wall when their cloud supplier pulls the plug on them.

    Don't go there people (with anything that is critical to your business continuity)

    sure we use AWS for our build servers but the Git repo is mirroed back to corporate HQ. So if Amazon pulls the plug or our beancounters deem it too expensive we are ok. Well, apart from provisioning a few white box PC's but that should not take more than a couple of days.

    does your company have such a fallback plan? If not why not? Got you head stuck in the sand then?

    1. Anonymous Coward
      Anonymous Coward

      Re: Cloud pricing

      Yes, plan in place. Use AWS and Azure, with geo-replication of data for additional backup and redundancy. Next question?

      1. Anonymous Coward
        Anonymous Coward

        Re: Cloud pricing

        Maybe, but public cloud should be inherently less costly than on prem. Three reasons: 1) They white box all of their gear, instead of paying EMC, Cisco, VMware, HP, etc a fortune. 2) They have hired a handful of Stanford Ph.Ds to full automate provisioning so there is close to zero manual intervention in the builds. 3) They have enormous economies of scale.... The prices may go up, but I doubt they go up too much or someone else steps in and undercuts them again.

        1. Lusty

          Re: Cloud pricing

          Not true. Public cloud is cheaper than badly implemented infrastructure, but should be cost neutral with well implemented infrastructure since the provider is performing maintainance etc. on your behalf. Just because it's big doesn't mean economies of scale - there is very little profit in a server sale these days so "white box" is a myth, especially when you realise that cloud providers then have to write their own management stack because that's normally the vendors job. In order to get to zero intervention there is a whole chunk of work to do up front which needs teams of staff to create and maintain. They do have people who know their stuff, and are paying handsomely for those staff, but to say it's a handful of PHDs is just daft. They also have an army of networking staff, config staff, build staff, and architects not only for the compute but the facilities as well. Not to mention that public clouds are very much in focus and having to pander to eco warrior whims and so are not buying the cheap electric the rest of us are using. In fact, all the extra things they need to design into a facility probably makes it system for system more expensive than you could do it internally.

  3. Ole Juul

    Who's laughing now?

    Me.

    (and a lot of other guys too)

  4. Tony S

    @ A non e-mouse

    In my first year of management training, I was told "Turnover is vanity, profit is sanity". It has been true since the dawn of human commerce, but there are still people that refuse to learn this particular lesson.

    As for the performance of cloud providers; currently working with one that is doing a pretty poor job, considering how much we are paying them. They seem incapable of providing a secure or stable service; we won't see 99.9% uptime this year (might even be less than 99% uptime).

    We could buy our own hardware in two months, software in another two, train staff for the cost of month 5, and then host it ourselves; and save the company a substantial amount after that. Plus, I wouldn't have to have 2 pointless weekly meetings where I raise complaints, they promise to look into it and do nothing.

    1. Erewhon

      Amazon turnover is Billions. They make no profit.

      Of course it's a tax dodge but it's a business model most Internet firms use.

      Of course the old 'making a profit = successful business' intuitively makes sense. But in the the dotcom 2.0 bullshit it's about being 'worth' billions without making any actual profit.

      1. Anonymous Coward
        Anonymous Coward

        http://techcrunch.com/2015/07/23/amazons-aws-unit-reports-q2-revenue-of-1-8b-391m-profit/

        "AWS profit in Q2 quarter was $391 million, a significant increase from the $77 million it reported for the year-ago quarter and even the $265 million in the last quarter."

        Got a towel handy to wipe all that egg off your face?

        1. Anonymous Coward
          Anonymous Coward

          Please show me how much Amazon turnover and profit was made from services out of the UK and how much tax they paid.

          The answer is Billions in turnover and they claim to have made no profit on that, so they paid virtually nothing in tax.

          1. Anonymous Coward
            Anonymous Coward

            Who mentioned the UK? Erewhon made a blanket statement that they make no profit, which is quite clearly incorrect. Where they declare the profit wasn't being discussed.

  5. Mage Silver badge
    Devil

    Cloud sales: Not new

    How many users are really saving by using these services instead of their own?

    The issue though isn't money. If it's not profitable it's not sustainable sales price. If it is very profitable, then many people can do it cheaper themselves. It's not like buying pay TV which if you think you need it, you can't make your own.

    The real issue is should people be using the cloud at all, other than temporary files or ad hoc collaboration of non-critical nature.

    Core Business functions shouldn't be outsourced.

    What strategy is there if you lose internet connection, so called cloud provider goes down?

    Privacy? Security? Backups?

    The cloud is a hype and buzz world. The services are as old as shared computers. It's not a new business but a 50+ year old one that for 20 years has been migrating from expensive secure leased lines to insecure and unknown up time internet connections to access it.

  6. Ken Moorhouse Silver badge

    Bubbles...

    ...often used to describe faddish things that are prone to being burst. As in... South Sea, Dot Com, for example.

    This might sound like an odd analogy, but to my warped mind the current scramble to The Cloud is similar to the lead-up to the financial crisis a few years ago. People in finance were irresponsible in offering mortgages to people who didn't have the resources to pay them back. As I understand it they were doing so by bulking up the bad payers with the good payers and saying "overall, you don't have a problem" to the ultimate providers of the wonga.

    What we have with The Cloud are providers saying "don't worry about the details, we'll take care of your data, rest assured." The owners of that data seem to think that "out of sight, out of mind" is a prudent enough policy for storing their data, and that "nice man who offered to keep it safe with Azure knows what he's talking about", but if it disappears or gets hacked, it is they themselves that are responsible for that loss. I am sorry, but you can not push that responsibility for your data onto a third-party.

    1. Anonymous Coward
      Anonymous Coward

      Re: Bubbles...

      There is also the very old but true saying that a fool and his money are soon parted. That appears to be what we are seeing here especially now we are seeing ddos attacks on some suppliers.

  7. Anonymous Coward
    Anonymous Coward

    Public Cloud Sales?

    So private cloud services are just network and mainframe systems relabelled. We should deduct that from the £75bn since it's plainly marketing chaff.

    Also SaaS ransomware sales are simply because people haven't found an alternative yet or stuck in their industries orthodoxy (1 example: adobe photoshop). Think this should also be deducted since it is misleading.

    So how much was really spent on the cloudy snake oil industry and how much of that is from companies trying to sell cloud services (pyramid scheme) or one off short-term usage?

    For an end user the public cloud is at best a short term fix for an emergency shortfall in resources which is a one off hit, if your company is run properly. The risks, exposure and loss of control can not warrant a sustainable model and any company that says otherwise is either trying to sell the cloudy snake oil or in serious trouble (short term spends and asset avoidance due to tricky finance issues).

  8. Tezfair
    Thumb Down

    So....

    As a reseller, I put my clients into the cloud, take a small profit and then never sell anything to them ever again. Good business model for me - not

    1. Erewhon

      Re: So....

      Resellers no longer offer any added value when you can buy direct from source. One less middle man taking a cut.

      1. Ken Moorhouse Silver badge

        Re: Resellers no longer offer any added value

        IT as a Commodity. This is the way the industry seems to want to move. I say "careful what you wish for".

        Data and its Ownership cannot be wrapped up in little packages wrapped with a nice little bow in this kind of way. Data is Difficult. This has been demonstrated time and again with various data breaches that have occurred. Yet this is the way Cloud is being sold, by glossing over the security aspects.

        My earlier post, maybe I didn't explain myself too well, but the intention was to draw a parallel between the statistical likelihood of a loan not being paid off, and a security breach affecting a customer's data being infinitesimally small. Fractions of a percent might seem small, but that percentage can equate to a lot of people with the scaling being talked about. The added gotcha with data though, is that once your precious confidential data is out there, plastered all over the web, there is no ability to revoke the publication of it.

        But security is about the rightful owner having access to it as well, (losing the key to your safe is a security issue, right?), well I'm aware of cases where the rightful owner cannot access their data, and I understand the Cloud is ok for uploading data, but to pay to remove it? Something is wrong with that charging model, but it is only when this needs to happen that it will be realised this is a big issue (extending the finance analogy, is this not comparable to a run on a bank, when people decide en masse to withdraw their money?)

        1. allthecoolshortnamesweretaken

          Re: Resellers no longer offer any added value

          Good point, especially the bank analogy. "Who should I trust with my data?" is a question exactly as important as "Who should I trust with my money?".

  9. amanfromMars 1 Silver badge

    How much is made and lost with VaaDS ‽ .... The Bull in the China Shop and Elephant in the Room

    If stock markets and currencies rise and/or maintained at unrealistic levels on the basis of false information and perverse analyses, government supported and institutionally provided to conceal melting markets, is that a criminal ponzi and Vapourware as a DisService?

    Or is it just the way business uses and abuses punters in capitalism and treats itself freely to consumer goodies?

    VaaDSSuppliers have a right need to know, as do y'all too if the truth be told.

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