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IDC: Cloud will be 10% of all IT spending by 2013

IDC says although real spending in cloud is six months behind expectations, it will continue to grow five times faster than other IT markets.

IDC's updated IT Cloud Services Forecast predicts that public cloud computing will make up $17.4 billion worth of IT purchases and be a $44 billion market by 2013.

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The IDC predictions presumably did not account for the estimated $19 billion, out of the U.S. government's $70 billion IT budget, that Federal CIO Vivek Kundra has vowed to spend on cloud computing. It also does not count spending on private cloud. IDC did not respond to requests for comment about its methods.

"It's increasingly apparent to everybody that this is a real phenomenon and not entirely marketing hype," said Jeff Kaplan, principal analyst at Boston-based consulting firm THINKstrategies. He said the numbers are an important indicator of the potential for cloud services.

Kaplan said that IDC had correctly forecast the economic downturn as a factor in the growth of cloud computing, but noted that there was a flip side as well. Even if buyers are attracted to the cloud pricing and consumption model, they're strapped for cash. The forecast states that actual spending is about six months behind 2008 predictions. "[IT buyers] still don't have money to spend on anything," even if there's a cheap cloud option. Another problem is persistent confusion about what constitutes cloud computing.

"There is a land grab on right now -- the truth is the market hasn't grown as fast as it could have," said Kaplan, because of the hype and overblown claims by vendors trying to cash in on the cloud label. That has left important enterprise buyers suspicious and confused, despite the growth of Amazon and Rackspace's cloud businesses.

It's increasingly apparent to everybody that [cloud computing] is a real phenomenon and not entirely marketing hype.
Jeff Kaplan, principal analyst at THINKstrategies,

Rackspace's last quarterly report roughly matches the IDC breakdown. Rackspace claimed at the end of August that it has 51,000 cloud customers, up from 16,000 last year. Revenue, however, was only $13 million, less than 10% of its net revenue for the year. Amazon does not disclose or differentiate cloud computing figures in its reports, but estimates range as high as $400 million per year in cloud revenue, a small part of the $20 billion retail giant.

The five-year forecast shows cloud computing, defined by IDC as Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS), taking up 5% of the total IT market. It is projected to rise to 10% by 2013, with the market growing by 26% each year.

The IDC forecast also predicts that SaaS spending will remain the greatest part of cloud spending. It currently makes up 50% of all cloud spending, but by 2013, it will only be 39% of the projected $44 billion. Servers, storage and application/PaaS will be gaining strongly, while infrastructure will remain 20% of overall spending on cloud.

IDC projects cloud will be 27% of all new spending -- new technologies, new companies, and new products instead of maintenance or lifecycle spending -- and that means, as vendors try to position themselves, cloud computing will spend the next five years as the hottest new IT market in town.

"Now, it's up to the industry to get out of its own way and let it happen." Kaplan said.

Carl Brooks is the Technology Writer at Contact him at

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