Gartner Hypes Cloud Computing With Some Sketchy Predictions

Gartner Hypes Cloud Computing With Some Sketchy Predictions
by Alex Williams

I read through the McKinsey & Co. report today on cloud computing. The one that caused a bit of a fracas a few weeks ago when they kind of rained on the parade about cloud computing. Hype is a big concern for McKinsey as they recognize how it can damage the overall market. I still think that McKinsey is a bit curmudgeonly but their views sure don’t seem so stuffy now that I have learned how Gartner is coming up with its numbers.

Gartner says the size of the 2008 cloud computing market stood at $42 $46 billion and will jump to $115 $150 billion by 2013.

How does Gartner come at these numbers? That’s the question John Treadway from Cloud Bzz asked at the Gartner Outsourcing and Vendor Management Summit in Las Vegas this week.

He learned that Gartner counts Google AdWords in its totals. Huh?

From Cloud Bzz:

I spoke with Gartner analyst Ben Pring (leading a session on Cloud), and he indicated that about half of that number is spending on Google AdWords. Say what??? That’s right, the people at Gartner consider media buying for Google AdWords a “business process” that is cloud-based. They also include ADP’s hosted payroll service and any ASP-delivered or SaaS offerings.

According to Treadway, Pring could not really justify how Google AdWords has anything to do with IT. That’s because there is no correlation at all.

As Treadway explains, the largest companies in the world buy Google keywords through agencies. They may use some online tools but for the mot part the work is outsourced.

How can Gartner expect to maintain credibility in the IT community with such predictions?

As Treadway writes:

The SaaS market he quoted at about $5b or so. If you add in all of the pure-play cloud stuff and PaaS vendors like Salesforce and Intut (QuickBase), you might be able to get to $10b. $42b is just a ridiculous number and will confuse the heck out of enterprise IT buyers.

Back to the McKinsey report…I am now not so skeptical of the consulting firm’s conclusions about how the hype can be so dangerous and the comparisons they make to the dot-com bubble.

From McKinsey:

The 2000 dot-com bubble provides an extreme example of the dangers of investing in hype…
* Huge investments were made based largely on hype
* Eventually, the inability to generate profits led to the collapse of most of the boom-time dot-coms
* From peak to trough, the NASDAQ-composite lost ~ 80% of it’s value

McKinsey caught a lot of criticism for its report. Gartner should get some criticism, too, for how it comes to its predictions for the cloud computing market.

Tags: cloud bzz, Cloud Computing, Gartner, mckinsey

This entry was posted on Thursday, May 7th, 2009 at 12:29 AM and is filed under Community Manager. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

Comments

robert says:

May 7, 2009 at 2:36 PM

If you include adwords by Google, why not include all online advertising? The fast money is on the cloud as all small business will figure out soon enough that they simply cannot afford IT. Once they latch on to other services, such as The Online 401(k)™ and most other online service apps, the facts will change the way everyone looks at it. Those who think they can avoid it, will be left out in the rain.
Like or Dislike: 0 0
The Feds Define Cloud Computing, Moving Faster Than The Private Sector | Tek Tips Blogs says:

May 7, 2009 at 11:35 PM

[...] groaned this week when we saw how Gartner came up with its forecasts for cloud computing. They count Google AWords in their estimates, [...]
Like or Dislike: 0 0
Lydia Leong says:

May 11, 2009 at 2:26 PM

I’m one of the authors of Gartner’s forecast. The forecast is divided into a lot of segments (which are in turn divided into a bunch of subsegments). Advertising is only one subsegment. We’re not arbitrarily throwing huge numbers against the wall; every subsegment is its own individual forecast, all added up to get the eventual giant number. But you can get granular detail if you want it, and thus subtract out advertising if you don’t think it fits in your market definition of the cloud.

More details on my blog.
Like or Dislike: 0 0
John Treadway says:

May 11, 2009 at 7:08 PM

I don’t have access to the Gartner report, but have traded emails with Ms. Leong (who’s blog on cloud computing is generally quite good).

I still don’t buy it. See more info here.
Like or Dislike: 0 0
Alex Williams says:

May 11, 2009 at 9:19 PM

Lydia - How do you respond to John? He lays it out pretty clearly in his blog post. Are you willing to provide copies of the report so there is some better transparency? It’s still very unclear how you justify advertising offsetting IT services. Even with the little view we have, the numbers don’t compute.
Like or Dislike: 0 0

Leave a Reply

	Name (required)

	Mail (will not be published) (required)

	Website

Related Tweets

Syndicated Content


	Impact of Design On Trust We attended RSA 2010 this week where VeriSign was a Platinum Sponsor. Executive Chairman, Jim Bidzos, gave a Keynote Address on the 'Internet and Trust' explaining that without trust, people are less likely to freely share information or transact online.... Launch of VeriSign Trust Seal With the launch of the VeriSign TrustTM Seal last week, we introduced a new section to the Website dedicated to the Trust Seal. The Seal enables Websites to communicate that they are a trusted site to do business with and... New Video Player Experience Videos on www.verisign.com have a new look and feel. Users will experience an improved delivery of videos that are optimized for their available bandwidth. During playback when hovering over the video, users now have the ability to quickly share (e-mail,...



	PayPal UK Launch Security Key - Guest Posting from PayPal I am happy to say they are using VeriSign Identity Protection to deliver this, which means that PayPal Customers will be able to use their token at other sites who join the VIP network. PayPal are the first UK members of the network, but there are around 30 other members in different countries around the world so you can expect to see more places where you can use your token in the UK appearing shortly. Facebook scam - Part 2 This just in from the BBC web site, Symantec have identified a virus that steals user names and passwords, nothing new there. But, if I understand this right, it is delivered through a Facebook invitation from someone you don't know and delivers malware which can then steal user names / passwords and also keylog credit card info. Survey finds passwords are not secure - well d'uh! I don't think the vendor community has been crying wolf about the problems that stronger authentication solves, more like highlighting that this problem is here and growing. Well the discussion I have had recently with many different organisations across many different industries are now resulting in more and more consumer projects in this area



	Open Identity Exchange: enabling all the VISAs of identity The Open Identity Exchange was launched this morning at the RSA conference in San Francisco. It is a significant step for federated identity as it will enable US government web sites such as the NIH to embrace open identity standards... Rethinking Internet Trust and Reputation Today, we are launching the VeriSign Trust Seal, a new service for small and medium businesses with an online presence. It is a big day for everyone at VeriSign who has been working really hard on the new service the... Google Hacked or Why the Cyber World Could Get M.A.D** As the world already knows, Google and a few other prominent US companies got severely hacked around Christmas time last year. Sophos has an interesting analysis of the exploit. Web malware and a zero day vulnerability in IE6 were...