Cloud Computing Gives Rise to New Revenue

Jane Shurtleff

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Cloud computing has proven to be not only a disruptive technology, but also an incredibly fast-growing and lucrative one. The Forbes’ Roundup of Cloud Computing Forecasts and Market Estimates, 2014 presents an IHS report which predicts that by 2017, enterprise spending on cloud computing will be $235.1B, triple the $78.2B spent in 2011.

Rise in spending translates into a rise in revenue for many cloud platform companies. For example, Microsoft reported last month that its commercial cloud revenue increased by 147% over the comparable quarter last year and now stands at $4.4 billion.

In April 2014, we announced our partnership with Microsoft, bringing their Azure ExpressRoute service to our IBX® data centers worldwide. We also announced the Equinix Cloud Exchange, an advanced interconnection solution that enables on-demand and direct connectivity to multiple clouds and multiple networks across the globe. Launching these two solutions has made Equinix an industry-leading provider of cloud access and interconnection services.

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Thanks to the growth in cloud services, we have seen tremendous gains in our Cloud and IT Services business this year, with record bookings and revenue growth at 19% year over year. Our cloud business accounted for a third of our new customers, including wins from ClearGov, Digital Ocean, and Velo Cloud. During Q2 of 2014, cloud players like Oracle, Workday, and Marketo expanded into additional global markets, capturing the performance and user experience benefits of customer proximity only achieved within Platform Equinix™ data centers.

Cost savings is a key driver for moving to the cloud

Many enterprises cite reducing and controlling costs as the number one challenge to managing their business. Moving resource-intensive applications and IT services to the cloud is an extremely attractive alternative to maintaining costly, in-house IT infrastructures, especially for small-to-medium businesses trying to compete in markets with larger enterprises. And, the pricing war among the big three cloud providers, Amazon Web Services, Google and Microsoft Azure, is definitely working in businesses’ favor, with cuts ranging from 30% – 60% over the last year.

Cost-effective cloud and interconnection services are critical to cloud success

We know from our own rapid growth in the cloud marketplace that cost-effective connectivity is the key to making the cloud work. Businesses need to be able to connect to multiple clouds, while lowering operational costs. At the same time, cloud service providers need to instantaneously connect to thousands of partners and customers, giving them the fastest and most economical path to market expansion and revenue acceleration.

As the home of the interconnected cloud, we get it. Your cloud interconnection platform needs to be as agile as the cloud services it supports and efficient enough to give you the cost-savings your business requires. We have amassed a diverse inventory of cloud and network providers worldwide. More than 450 cloud providers reside inside Equinix data centers today, making Equinix the place to go for both large and small businesses adopting cloud services.

Many cost reductions come from the close proximity to such a high concentration of cloud providers within Equinix IBX data centers, however, they’re also a result of the increased simplicity in managing cloud environments. Automated provisioning of multiple cloud connections, as supported by our Equinix Cloud Exchange, is a perfect example of how companies can simplify interconnecting to multiple cloud services. We are also the home of 1,000 networks, giving businesses the choice to select the most cost-effective connectivity solution and take advantage of our IP peering services to reduce networking costs.

The numbers don’t lie. Equinix has achieved the critical mass of cloud services and interconnectivity options to drive the convergence of cloud services and cost savings in our data centers that businesses need.