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Quarter of cloud suppliers will evaporate by 2015

Gartner says that the long-term forecast for those enterprises now committing money and resources to the adoption of a cloud-based solutions is not very good. That's because 25 per cent of cloud vendor companies will be gone within 24 months - forced out of business and into oblivion by competition, mergers and acquisitions.

This week the Gartner Data Centre Conference was held at the Venetian Hotel in Las Vegas, Nevada, where the weather is as always as sunny as the dispositions of the croupiers at the crap tables.

And it was there, alongside the pristine and remarkably blue waters of an ersatz Grand Canal, that Gartner's VP of Research, William Maurer, told an attentive and overflowing audience that as far as the cloud is concerned, bad times are just around the corner.

Mr. Maurer's thesis is that cloud providers (like the rest of the global comms industry) are under intense pressure to minimise costs and need the support of their customers, right now, to enable them to "make some money" and thus have a better chance to stay in business.

William Maurer added, "You need to make to make sure that your service providers are successful. Give them a chance to make a reasonable return on their investments, give them a chance to make some money. Don't take all the money off the table, because if you do, you are not going to have a lot of them around. There is a real risk."

It seems that what the Gartner analyst was doing was making a plea for cash-strapped businesses to be prepared to pay over-the-odds for cloud solutions and services so that smaller vendors will be able to keep going. That's the sort of kite that might speculatively be flown in Europe from time to time but it hardly seems to be in keeping with the US ethos of unbridled laissez-faire capitalism where the weak go to the wall and devil take the hindmost.

After years of relentless cloud hype, the wheel now seems to have turned with many of those buying cloud services re-assessing their decisions in the light of continuing concerns about the security of data in the cloud and the future cost of implementing cloud solutions.

One school of thought has it that such re-assessments will push some users to opt for doing business with larger vendors who charge more but are perceived to be able to provide more secure and more robust cloud services. The other school believes that smaller providers will be cheaper and more willing to provide bespoke elements that can be stitched on to their off-the-shelf products.

If more buyers opt for option one then cloud vendor consolidation is a racing certainty - even as the market for cloud security products and services will increase.

According to Gartner, figures will show that cloud-based security will have been worth US$ 2.1 billion globally over the course of 2014 and will reach $3.1 billion by the end of next year.

Gartner also believes that "low-cost cloud services" will cannibalise up to 15 per cent of the revenues of the big outsourcing companies and that a fifth of the large IT outsourcers that have sat on their laurels in recent years and failed to invest significantly in leading-edge technology will also fall victim to consolidation, with some big names disappearing.

IT and telecoms journalists are constantly bombarded with copies of reports from different companies, some saying one thing about the latest technological fad and others saying the opposite. Consistency is not the strong long suit of all analyst companies some of which are reeds that can and do bend obligingly to the prevailing breeze - Gartner being a noticeable exception, obviously.

This willowy attribute reminded me of an excellent quote from the diary of Chuck Palahniuk, the US author of "transgressional fiction" perhaps best known his novel, "Fight Club" (a book which certainly has relevant echoes for the global comms industry- at least in as far as the subject of knowing which of your rivals are imaginary and which aren't is concerned).

It also fits nicely with the cloud hype (for and against, now it's up, now it's down stuff) and is in keeping with the ongoing meteorological motifs that surround and define the subject. Palahniuk writes, “Just for the record, the weather today is calm and sunny, but the air is full of bullshit.”

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