Microsoft, IBM Poised for Cloud Boost

Cloud computing is more than just pie in the sky, according to the latest revenue forecast from IDC.
Author:
Publish date:

REDMOND, Wash. (

TheStreet

) -- Is cloud computing just pie in the sky or a largely untapped source of revenue for the likes of

IBM

(IBM) - Get Report

,

Hewlett-Packard

(HPQ) - Get Report

,

Dell

(DELL) - Get Report

and

Microsoft

(MSFT) - Get Report

?

According to

IDC

, big money is starting to appear in the cloud, and Silicon Valley is poised for a major payday.

In a note released on Friday, IDC forecast that server hardware for public cloud computing will grow from $582 million in 2009 to $718 million in 2014. Server revenue for the larger private cloud market will grow from $2.6 billion to $5.7 billion over the same time period.

Cloud services

, which offer compute power and storage via the Internet, are fast becoming one of the tech sector's hottest trends. Public clouds, such as

Amazon's

(AMZN) - Get Report

S3 managed storage service, are publicly available via the Internet. Private clouds typically serve users within a specific company or organization. With businesses under pressure to quickly share information and mange internal systems over vast distances, private clouds are growing in popularity.

"Many IT decision makers are seriously considering cloud computing as a way to dramatically simply their sprawling virtual and physical infrastructure," explained IDC research analyst Katherine Broderick in a statement.

Yet

cloud services are still some way from becoming ubiquitous

. Key barriers in the path to widespread adoption are

vendor in-fighting

and businesses' reluctance to relinquish control of key applications and data.

"There is still some lingering apprehension over issues like integration, availability, security, and costs," said Broderick. "These concerns, and how they are addressed by IT vendors, will continue to guide the adoption of cloud computing over the next several years."

These type of obstacles multiply as U.S. tech heavyweights look to expand clouds overseas. Earlier this week, the

Wall Street Journal

reported that companies like Microsoft and Google are pushing to streamline the European Union's privacy rules to make it somewhat easier to offer remote computing services there.

Clearly, the

revenue benefits for server makers such as IBM are evident

. Microsoft, however, is walking something of a revenue tightrope as it

unrolls its own Azure cloud strategy

. The company's challenge is how to make its cloud initiatives work without eating into its traditional software business, something that investors will be closely monitoring.

Speaking at the University of Washington earlier this year, Microsoft CEO Steve Ballmer said that his company is fully committed to cloud computing. "We're all in," he told students, according to the

Seattle Post-Intelligencer

, and explained that 70% of Microsoft employees are working on cloud-related projects.

The software giant recently announced that it had signed up

eBay

(EBAY) - Get Report

as one of the

first customers to use its Azure appliance

.

-- Reported by James Rogers in New York

Follow James Rogers on

Twitter

.