Private Cloud Adoption Growth Continues to Accelerate

By Frank Ohlhorst  |  Posted 2012-01-24 Print this article Print

NEWS ANALYSIS: Record growth seems to be the norm for companies offering private cloud services as more and more businesses sign on.

Just like the Energizer bunny, the adoption of private cloud technology keeps going and going. A case in point is DynamicOps, a cloud services provider that has seen some 300 percent growth in the private cloud market through 2011.

While DynamicOps is the latest example of a rapidly growing cloud services company, it's by no means the only one. Many other services vendors are claiming that 2011 has been a banner year for growth.

Cloud hosting company Softlayer reported in December that it had record-setting growth for its private cloud deployments, almost doubling revenue in the process. INetU, a managed hosting provider, reported that it added a sixth data center last summer to support demand for cloud solutions and expanding its property holdings by 144 percent in 2011 in anticipation of additional growth.

Hosting giant Rackspace has also benefited from the increased demand for cloud services, posting double-digit growth for the last five quarters. Orlando, Fla., based Server Intellect, yet another private cloud hosting company, has seen impressive growth as well, and increased data center expansion last year.

The above-mentioned companies all share one thing in common: All are in the hosting business-a business that is akin to outsourcing IT operations, especially when private cloud technology is the primary service on offer.

It is obvious that private cloud-based solutions will continue to grow and that hosts will maintain the upper hand, simply because they already have the infrastructure in place to lease out private clouds. What's more, the explosive growth demonstrated by these hosting companies, and many others, counters arguments that the supply of private cloud hosting services will soon exceed the demand. Analyst firm Gartner predicts worldwide revenues for cloud services are expected to reach $148.8 billion by 2015.

Simply put, private clouds are arriving on the IT front, and it will be an IT paradigm shift that will become almost impossible to avoid. However, there may be a shift in the future of how enterprises will manage and deploy private clouds. It all comes down to how larger enterprises want to leverage the technology.

"Interest in private cloud is high because of the speed and agility that it promises, Rachel Chalmers, research director, Infrastructure Management for 451 Group, told eWEEK in an email. "However, in order to realize these benefits, enterprises must be able to easily transition to and manage the infrastructure," Chalmers wrote.

This is a point that may not be well understood by enterprises seeking to transition to private clouds. Removing the "private cloud" from IT operations exposes one significant truth: Physical infrastructure must exist somewhere to "host" the cloud services. Usually, that physical infrastructure is virtualized to abstract the hardware from the services. Yet that hardware still has to exist.

With so many enterprises currently operating their own data centers, or at the very least their own server farms and infrastructure, a hosted private cloud may be an anachronism. Why pay to use external hardware, when that hardware may already fall under corporate ownership.

That is where hosted private clouds will run into the first speed bumps, thanks to the efforts of companies such as Microsoft, HP, IBM and Oracle. All of which are offering and developing the tools needed to build private clouds on internally supported hardware. Simply put, those software and hardware giants are on a mission to place private clouds into the corporate data center, possibly reducing the overall demand from enterprises for externally hosted services.


Frank Ohlhorst Frank J. Ohlhorst is the Executive Technology Editor for eWeek Channel Insider and brings with him over 20 years of experience in the Information Technology field.He began his career as a network administrator and applications program in the private sector for two years before joining a computer consulting firm as a programmer analyst. In 1988 Frank founded a computer consulting company, which specialized in network design, implementation, and support, along with custom accounting applications developed in a variety of programming languages.In 1991, Frank took a position with the United States Department of Energy as a Network Manager for multiple DOE Area Offices with locations at Brookhaven National Laboratory (BNL), Princeton Plasma Physics Laboratory (PPL), Argonne National Laboratory (ANL), FermiLAB and the Ames Area Office (AMESAO). Frank's duties included managing the site networks, associated staff and the inter-network links between the area offices. He also served at the Computer Security Officer (CSO) for multiple DOE sites. Frank joined CMP Technology's Channel group in 1999 as a Technical Editor assigned to the CRN Test Center, within a year, Frank became the Senior Technical Editor, and was responsible for designing product testing methodologies, assigning product reviews, roundups and bakeoffs to the CRN Test Center staff.In 2003, Frank was named Technology Editor of CRN. In that capacity, he ensured that CRN maintained a clearer focus on technology and increased the integration of the Test Center's review content into both CRN's print and web properties. He also contributed to Netseminar's, hosted sessions at CMP's Xchange Channel trade shows and helped to develop new methods of content delivery, Such as CRN-TV.In September of 2004, Frank became the Director of the CRN Test Center and was charged with increasing the Test Center's contributions to CMP's Channel Web online presence and CMP's latest monthly publication, Digital Connect, a magazine geared towards the home integrator. He also continued to contribute to CMP's Netseminar series, Xchange events, industry conferences and CRN-TV.In January of 2007, CMP Launched CRNtech, a monthly publication focused on technology for the channel, with a mailed audience of 70,000 qualified readers. Frank was instrumental in the development and design of CRNTech and was the editorial director of the publication as well as its primary contributor. He also maintained the edit calendar, and hosted quarterly CRNTech Live events.In June 2007, Frank was named Senior Technology Analyst and became responsible for the technical focus and edit calendars of all the Channel Group's publications, including CRN, CRNTech, and VARBusiness, along with the Channel Group's specialized publications Solutions Inc., Government VAR, TechBuilder and various custom publications. Frank joined Ziff Davis Enterprise in September of 2007 and focuses on creating editorial content geared towards the purveyors of Information Technology products and services. Frank writes comparative reviews, channel analysis pieces and participates in many of Ziff Davis Enterprise's tradeshows and webinars. He has received several awards for his writing and editing, including back to back best review of the year awards, and a president's award for CRN-TV. Frank speaks at many industry conferences, is a contributor to several IT Books, holds several records for online hits and has several industry certifications, including Novell's CNE, Microsoft's MCP.Frank can be reached at

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