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4 Companies that will Dominate the Future of Cloud Computing

Fast forward a couple of years and the mention of the word "cloud" will no longer draw up the vision of an actual cloud, the sky, or anything even remotely related to the weather. Rather, it will, in all probability, denote storage technology and even the name of the company dominating the cloud market at that time.

Cloud Computing Deciphered

To begin with, there is absolutely nothing fluffy about cloud computing technology!

Initially used in telephony schematics to hide irrelevant details, the cloud symbol now represents the Internet in computing diagrams. The fundamental notion of cloud computing dates as far back as 1950, but it was in 2006 that the term was popularized by Amazon.com AMZN .

Basically, cloud computing is a procedure for storing data and software at a location outside the computer that can be easily accessed from anywhere and at any time via the Internet. This process is gaining traction as it can significantly cut IT costs for companies by removing expensive servers and trimming maintenance staff.

Simple enough, right?

Cloud's Incredible Growth

Given its scope and advantages (cost, scaling, convenience, etc) it's not surprising that the demand for cloud computing software and applications is on the rise. Cloud vendors usually offer the infrastructure and the related technology as a service, which further reduces the costs for adopters.

According to Centaur Partners, Software-as-a-Service (SaaS) and cloud-based business applications are likely to grow from $13.5 billion in 2013 to $32.8 billion in 2016, reflecting a compounded annual growth rate (CAGR) of 19.5%. Moreover, Computerworld forecasts that 42% of IT decision makers are planning to increase spending on cloud computing in 2015.

As mainstream adoption gathers steam, infrastructure will have to be built rapidly. It would therefore be more advantageous for the leading vendors to collaborate or even merge to capture a larger share of the pie - particularly since a number of niche players are entering the space with specialized capabilities.

In short, cloud is the next big thing!

War of the Future

One thing is for sure - cloud will continue to evolve over the next few years and demand will surge. In fact, almost all companies will be moving to the cloud in one way or the other.

Most recently, Dell Inc., along with private equity firm Silver Lake, announced that it would take over data storage company EMC Corporation EMC in a record $67 billion deal.

The combined entity will be the world's largest privately controlled, integrated technology company. Through this deal, Dell primarily intends to retain its relevance as the computing world moves to cloud services and data storage market.

While every company is preparing to fight it out, we believe the future of the cloud belongs to the following players not just because of how far they've come to date but also because of the deep pockets that can keep them there.

Amazon rocked the investment world with robust second-quarter results wherein it crushed the estimated earnings by more than 200% and issued a bullish outlook for the third quarter. The company earned 19 cents per share as against the Zacks Consensus Estimate of a loss of 15 cents.

Moreover, the company swung back to profit from a loss of 27 cents incurred in the year-ago quarter. Revenues surged 20% year over year to $23.2 billion and comfortably beat the Zacks Consensus Estimate of $22.3 billion.

Strength in its cloud computing business was the key to its success as cloud computing revenues skyrocketed 81%. Amazon Web Services (AWS) is way ahead of everyone else in public cloud services, and other tech companies are racing to catch up.

In fact, market research firm Gartner believes that AWS is "the overwhelming market share leader," as it runs more than 10 times the infrastructure cloud-computing capacity as the next 14 major rivals taken together.

Considering Amazon's fast and innovative approach, this company is surely a name to reckon with.

Microsoft Corp. 's MSFT Azure and Office 365 are catching up with Amazon. Microsoft is second today in terms of compute capacity in the cloud, which along with its enterprise relationships is something to reckon with. Also, the company is a major provider of hybrid cloud services, a market expected to accelerate rapidly in the next few years.

If Office 365 and similar services are taken into consideration, Microsoft is, according to investorplace.com, "already raking in over $6 billion in cloud revenue and is projecting $20 billion by 2018."

Going ahead, it is difficult to overlook Microsoft when enterprise software brands are considered.

AlphabetGOOGL isn't exactly giving up. Google's cloud services are growing very strongly and its Google Docs and Google Drive products are gaining traction. Google's chromebook, which relies entirely on the Internet is the company's way of drawing more people into its cloud and it has also recently launched an enterprise-focused Nexus device that may be used to plug another hole in its enterprise offerings. Google does have some way to go however, but a strong motivation given the huge prospects in the cloud, growing competition in the advertising business and the financial means to make it happen.

SalesforceCRM is the top Customer Relationship Management ("CRM") vendor in the SaaS enterprise application market. The company was the first to sign up large customer accounts, which helped it build a strong market position. According to Gartner, the SaaS market will grow 19.5% to $32.8 billion in 2016 from $13.5 billion in 2011. Apart from this, the firm expects global spending for enterprise software to increase 7.3% year over year to $344.0 billion in 2015.

The key markets expected to benefit from this spending are security, storage management and CRM and Salesforce is well-positioned to capitalize on this.

Also, the company's cloud partnership with rival Oracle Corp., Hewlett-Packard Co. and most recently Microsoft will add value to its portfolio and the resultant synergies should drive long-term growth.

To Wrap Up

It seems that the biggest winner will most probably be Amazon. According to Forrester analyst John Rymer, "They have a massive customer base and they're been at it longer than anyone else," Microsoft is likely to be a very close second.

Services from Alphabet and Salesforce will grow, even if not as quickly as Amazon's. It's where the world is headed.

There might be others that will change the face of the cloud again - but for now, this mix seems to be it.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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