Cloud computing explained
The increasing importance of this type of technology emphasized by $9.3B deal
Cloud computing got another boost last month after Oracle announced it was purchasing NetSuite for $9.3 billion (U.S.). The deal is just the latest for cloud computing firms, but to those not familiar with the industry the size of the deal certainly raised some eyebrows. In fact, the latest quarterly earnings from Amazon, Alphabet and Microsoft all showed the increasing importance of the cloud to the tech giants’ bottom lines.
Why is cloud computing getting so much attention? We’ll explain:
What is cloud computing? Put simply, cloud computing is the ability to do tasks over the Internet as opposed to having all the hardware and software on the machine that you or your colleagues are working on.
The Internet is known as “the cloud” while the software and applications running on the servers represent the “computing” portion of the name. Do I use “the Cloud?” We consumers pretty much do cloud computing constantly. Whenever you store a photo in Google Drive, upload a file to Dropbox, chat with a friend on Facebook, play against a pal on Xbox Live or even access email you are engaged in a form of cloud computing.
As opposed to traditional software which would typically require a onetime fee, cloud services usually involve a monthly or yearly subscription. Netflix, Microsoft’s Office 365 suite and music services such as Apple Music and Spotify all follow this model.
For businesses, cloud computing is particularly beneficial. Companies can deploy software to all their employees without having to worry about managing servers, scaling, and developing and testing software and software upgrades. Such businesses may only pay for the capacity and/or the services that they use.
Why do businesses care so much about this? The wide availability and simplicity of cloud solutions is what makes companies such as NetSuite, which makes cloud-based business management software, so valuable.
A survey from research firm IDC in February found that 58 per cent of companies planned to use webbased cloud services, up from 24 per cent in 2014. And with all that corporate use and expansion comes an incredibly large market. Cloud spending in 2015 hit $175 billion and is projected to top $315 billion by 2019, according to Gartner.
Who are the players? Many of the biggest names in technology offer cloud solutions or are beginning to dabble in it. From an infrastructure standpoint, Amazon is the clear leader with a market share of 31per cent at the end of 2015, according to Synergy Research. Microsoft, IBM and Google are next in line, and are also making investments and trying to grow their stake.
It gets even more competitive on the software side, The aforementioned companies are battling it out, as are such other industry stalwarts as Oracle, Salesforce, NetSuite, SAP and VMware-software maker EMC.
The proposed Oracle-NetSuite transaction is merely the latest cloud computing blockbuster. Dell is in the process of acquiring EMC for $67 billion in one of the largest tech deals ever.