Cloud

IaaS demand soars: Why this is great news for Amazon and IoT startups

Can cloud providers and data center managers keep up with the increases in demand for IaaS? Jack Wallen explores this question, and offers his predictions.

Image: Jack Wallen

Infrastructure as a Service (IaaS) and the cloud are the current leaders in the realm of IT. In the world of modern computing, you cannot escape that particular fate. And with every passing day, mobile computing continues to dominate the market in ways no other platform can challenge. Along with the exponential growth in mobility, IaaS and the cloud will continue to rise and expand, far beyond what anyone expected.

How much did they grow?

According to Data Center Knowledge, in 2015, the top cloud providers raked in over $11 billion in revenue selling virtual services. According to Gartner, that marks only the beginning of what IaaS will bring in. In fact, by Gartner's estimation, public cloud services revenue will top $204 billion in 2016 — that's tenfold growth in just five years.

What does this mean beyond the largest providers of IaaS becoming increasingly more powerful? It means that data center growth is going to expand beyond our wildest dreams. This means the biggest players in the industry (Amazon, Microsoft, Rackspace, IBM Cloud, Aliyun, and Google) will continue growing at unprecedented rates. And as long as the mobile industry drives the need for cloud-based resources (it has shown zero signs of slowing down), those top-tier companies will be unstoppable.

The big question is: Can they keep up with the demand? Here's the thing: Amazon is dominating that space in ways that has every other company (even Google) shaking their heads. So when you have the likes of Google, Microsoft, and IBM playing a serious game of catchup with the big 'Zon, you know the demand is nowhere near the supply. No surprise, right?

What is surprising, however, is that Google does not rank at the top of the heap. Considering the global domination of the Android platform, one would think Google leads the top seven providers, but Google doesn't come close to Amazon's IaaS profit. In 2015, Amazon Web Services drew in over $7 billion in profit (standing at 27% market share), compared to Google Compute Engine drawing in a mere $281 million (standing at 3% market share). Google knows it is lagging behind Amazon and is doing everything it can to shrink the margin.

SEE: Mini-glossary: Cloud computing terms you should know

Amazon's advantage

The biggest advantage Amazon has is its sheer number of products and services. Consider this list of available Amazon IaaS (via AWS) offerings:

  • Scalable virtual servers (Amazon Compute)
  • Networking
  • Content delivery
  • Storage
  • Database
  • Deployment
  • Management
  • Application services
  • Analytics
  • Enterprise applications
  • Mobile services
  • Internet of Things (IoT)

In 2014 Amazon opened its first "Pop Up Loft," in San Francisco in order to help businesses discover all of the services the company offers. I believe this is key to Amazon's success...the ability to not only supply for rising demand, but to create demand by developing products and services.

Take, for instance, Amazon Echo. Amazon created one of the most popular IoT devices of recent years (it has over 37,000 reviews on Amazon with a 4.4 star rating). Echo and the services it offers is so popular that every major company in the market is working to recreate that success. Apple, Sony, Google, and even smaller one-off companies are all diving into that layer of the IoT cake, hoping to find the same level of success as Amazon. What those other companies have to understand is that Amazon had the resources to back up Echo; Amazon knows IaaS better than anyone and can deliver when the demand challenges their supply.

IoT continues to push IaaS

The ever-growing need to make smarter homes, cars, and businesses will push the demand boundaries of IaaS. This alone could easily keep the lights on for many businesses providing IaaS.

Many IoT startups have the ingenuity and capability of creating revolutionary products, but those companies do not have the resources to serve up the services their devices demand. When they come up against that wall, they will turn to the likes of Amazon, IBM, Microsoft, or Google to provide the IaaS side of things. This not only offers the startup an "instant on" capability, but the ability to scale up if their product gains popularity. And considering how many IoT products are being created now, the exponential demand for IaaS will only continue.

SEE: Internet of Things: Five truths you need to know to succeed

Data center predictions

Most companies cannot afford to host their own data centers; to that end, outsourcing this service is a must. However, there are other alternatives that I believe will start rising in popularity.

One such alternative comes from companies like Centercore, which deploys hardened, on-premise data centers that are customized to fit your needs. By building on "core units," Centercore can easily and quickly piece together a stand-alone data center for your company. The units are fabricated off-site, built with a robust steel support structure, covered with a weather-resistant shell, outfitted with the technology you need, and delivered to your location. For any company that doesn't want their data center housed miles away from campus, the "data center in a box" is the ideal solution. I believe this type of data center will see steady growth as companies decide to return the services in house.

But I don't believe "pop up data centers" (such as those offered by Centercore) will be relegated only to on-site duties; the flexibility these offer could easily mean larger companies could start dropping them into heavily populated areas in order to more easily handle demand. These micro data centers (sometimes called cloudlets) could easily give larger businesses an edge over those that retain all of their services in a centralized location. Imagine your company strategically placing numerous Centercore-built facilities throughout your metro area. Yes, it might be a nightmare to administer, but it will offer a means to expand that you might not have previously enjoyed.

There's no escaping now

Thanks to the continued rise of mobile platforms and IoT, IaaS is here to stay, which means the demand on data centers will continue to rise. The way data center managers keep up with this demand might require a bit of out of the box thinking. Thankfully, the technology is there, and "the big four" — Amazon, Microsoft, IBM, and Google — are up for the challenge.

Also see

About Jack Wallen

Jack Wallen is an award-winning writer for TechRepublic and Linux.com. He’s an avid promoter of open source and the voice of The Android Expert. For more news about Jack Wallen, visit his website jackwallen.com.

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