Cloud computing market is expected to register a 36 percent compound annual growth rate (CAGR) in revenue, making it just shy of $20 billion at the end of 2016, says a new research from Market Monitor, a service of 451 Research.
Despite this growth, the cloud computing market is confronted with several challenges including security concerns, transparency and trust issues, workload readiness and internal non-IT-related organizational issues, the research said.
The report analyzes the three important segments of the cloud computing industry, which includes infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS) and infrastructure software-as-a-service (SaaS) segments.
IaaS accounts for the majority of total market revenue in 2012, with more than half of the total public cloud market share. IaaS market is expected to grow a 37 percent CAGR through 2016.
Meanwhile PaaS accounted for nearly a quarter (24 percent) of the total public cloud revenue in 2012 and is expected to grow at a CAGR of 41 percent between 2012 and 2016.
The infrastructure SaaS sector, which does not include enterprise SaaS revenue, represented 25 percent of total cloud revenue in 2012 and is expected to generate a 29 percent CAGR through 2016.
The report, however, reveals only a dozen of cloud computing vendors generated more than $75 million each in revenue in 2012 and 83 percent of all services provider generated $15 million or less each in 2012 revenue.
Publicly traded companies comprise 23 percent of the cloud vendors tracked, and generate 78 percent of the total revenue. Vendors that constitute the cloud 'midmarket' (between $5 million and$50 million in revenue) accounted for 25 percent of total revenue in 2012, the report said.
"Several vendors currently included in the cloud 'midmarket' are titans in their core IT sectors," said Greg Zwakman, research director, Quantitative Services, 451 Research. "It is still early days for the cloud divisions at these vendors, and running the same revenue distribution analysis against our 2016 forecasts paints a different picture."