The rise of cloud services is also driving the growth of cloud-enabling technologies—a market that will grow at a 21 percent compound annual growth rate (CAGR) over the next few years until it reaches $22.6 billion in 2016, according to 451 Research's Market Monitor in a new report, "Market Monitor Cloud-Enabling Technologies."
Cloud-enabling technologies, as defined by 451 Research, are those technologies that are installed, delivered and consumed on-premises, including virtualization, automation and management and security. By definition, they're not cloud; rather, they are the technologies that make cloud consumption and usage possible.
"The drivers of growth are twofold," said Victoria Simons, research analyst at 451 Research, in a prepared statement. "Initial adoption of the cloud is driven by the need for cost reduction and more efficient computing options. As the infrastructure is virtualized, customers then need tools to manage, control and secure their IT environments to fully realize the benefits of virtual/cloud environments. We see the cloud-enabling technologies market growing strongly as large enterprises and SMBs continue along the path of flexible computing."
It's not surprising that the market is growing—and growing quickly. But there are a few interesting highlights from the report:
- Virtualization accounts for 66 percent of the total market share of cloud-enabling technologies. As the technology that forms the foundation of cloud, it's not a surprise, but as the most mature aspect of the market, its CAGR is also the lowest (a meager 16 percent).
- The broad automation and management category will see a CAGR of 28 percent.
- Security will show the highest CAGR, at 29 percent.
- In the last 12 months, there have been 12 significant acquisitions in the cloud-enabling technologies space. 451 Research expects merger and acquisition activity to continue ramping up as firms either bulk up their cloud offerings or make their initial entries into the cloud market.
- Public firms represent the vast majority of revenue generated (87 percent), far outweighing private firms (13 percent).
- Meanwhile, public vendors account for 21 percent of the total companies in the space, compared to 79 percent private vendors.
- Only six vendors have revenue exceeding $500 million, based on 2012 market stats. Also in 2012, 44 percent of vendors generated less than $5 million in revenue and approximately one-third of vendors generated between $5 million and $25 million in revenue.