IBM: small provider price war saturating cloud market

He said this happened while smaller cloud providers saturated the market further by pushing a “pure cost/price discussion” around the service.

“The race to the bottom in terms of pricing has fuelled the perception of cloud as a commodity rather than a value-based service that can enable major business transformation and growth,” Evans said.

“While price point pressure will continue, there is the question of how long the industry can sustain it,” he said.

“This raises the question of whether customers can trust their smaller cloud provider to stay in business and how that will impact the provisioning of services to their organisations.”

As a result, Evans said it distracted organisations from “leveraging the full potential” of the cloud.

The move to private

As for whether the cloud space is able to sustain all of these big and small players, Evans foresees “significant consolidation” beginning in the latter half of 2014 and continuing into early 2015.

“Consolidation will drive the pace market maturity, as organisations start to have more value-based cloud discussions focused on the business objectives and outcomes,” he said.

A movement towards public cloud is also anticipated, which Evans attributes to organisations becoming more comfortable with the concept of the cloud “conceptually and culturally.”

Even so, a push to get enterprise-based applications into the cloud is also expected to take shape, potentially leading to more interest in private and managed cloud platforms.

“In terms of uptake of cloud services, we will see an increase in PaaS [platform-as-a-service] and SaaS [software-as-a-service],” Evans said.

When it comes to PaaS, anticipated application upgrades from Oracle and SAP are predicted to fuel demand.

“From a SaaS perspective, we have seen more and more customer demand for SaaS, particularly in the areas of analytics, online commerce, mobile, and social/collaboration platforms,” Evans said.

Organisations looking for “smarter ways” to manage these technologies will be responsible for the growth, and Evans sees 2014 as a year where demand will remain strong.