Emil Sayegh

Dec 30, 2015

10 Cloud Industry Predictions for 2016

2015 was a year of transformation and growth for the entire IT industry, and the cloud was the poster child for that transformation. 2016 is sure to be filled with even more new cloud opportunities and advancements. Now that the industry is realizing the customization and control that enterprise needs, we have gotten a peek at the world that Nicholas Carr saw in 2003, when he said IT doesn’t matter, and then in 2008 when he predicted the big switch. IT has completely transformed and now matters as much as it ever has, but technology has changed the role of IT into an innovative hub with automated tools, better capabilities, and new ways of thinking about the data that we value.

I’d like to tip my hat and pay homage to the army of developers and engineers that have developed the tools to create the cloud we have today: virtualization, containers, hypervisors, automation at every layer of the stack, and various open source cloud projects. These folks make it happen for all of us.

10 Hosting Industry Predictions for 2016 from Codero

The cloud is now more prevalent in our world than ever before and in a variety of forms: public, private clouds and hybrid clouds; consumer applications galore; and multiple levels of interconnectivity. Data centers, applications, data, and everything in the Internet of Things (IoT) have become extremely interconnected in ways that few had foreseen.

What will 2016 hold? Here are some predictions.

1. Big Data and Internet of Things: Part 2

By 2016, big data and analytics initiatives will hit another gear, consuming data, resources, and the behavior of the world around us. Reports indicate that big data investments will account for nearly $40 billion in 2015 alone, much of which is driven by the Internet of Things. These are synonymous constructs that collect, distribute, transfer, and analyze data in a thriving marketplace, ultimately leading toward knowledge and actionable insight.

Tying everything together are cloud, interconnectivity, and frameworks. Big data has long been a cloud case study, but 2016 will further bring cloud, IoT, and big data to the mainstream. Reliable, fast, safe, and accurate, the cloud has unlocked the potential for big data like never before.

2. Data to the Edge

IoT is the “killer app” in the business world. We’ve become accustomed to ubiquitous data and the industry has become comfortable with the big data construct and the standard model it’s built on. Everything evolves in time, though, and the next phase will take data to the edge to reduce latency and cost.

Think about it. If big data and insights gained from its implementation are good for the business, doing it faster with more power is even better. If you accelerate time to insight, bigger benefits are gained.

Computing translates elements from the world around us into the digital realm. That takes processing, which in the current model incurs latency and bandwidth costs. These are inescapable facts. The answer here is that processing of agrobusiness, video, healthcare, and consumer device data collected at the edge, stays at the edge. What we will see is companies in these businesses gravitating away from the big NFL cities and integrating secondary data locations that are more nimble but equally powerful and capable. Site selections are based on capacity, cost, capabilities, and more. The impetus here is that the data profiles of emerging IoT applications are increasing, and latency is becoming a real issue. Video applications and distribution are on the rise, applications demand quicker and increasing amounts of data, and rapid connectivity is a necessity. The points of capture and distribution are becoming increasingly critical and capable.

Data at the edge will change the market and data center selection. The focus will shift to where data can be processed best and cheapest.

3. It Will Be a Millennial Developer’s World

The age of the millennial developer will reach new heights. The pace of evolution in the development business is on an extremely rapid tear; bleeding edge languages will continue to fade quicker than ever. New languages, code, databases, and frameworks will change the application landscape in record time – and it’s all driven by the new generation of millennials.

Companies will be in a dogfight for resources and for people who can jump in, learn quickly, and adopt quicker than the previous generation. Millennial developers will be in even higher demand; companies will have to make accommodations to help them be productive and grow their careers. Thanks to cloud technologies and orchestrated infrastructure, these needs can be met more easily than ever through distributed (but interconnected) workforces that appeal to millennial developers.

4. The Enterprise Will Approach a ‘Software State’

Companies have become increasingly dependent on IT systems and applications, and more custom applications drive businesses today than ever before. Software-defined computing constructs are changing the way applications and infrastructures are delivered. For example, software-defined networking has been a valuable companion to cloud systems because it can deliver resources programmatically on demand. This leads to efficiency, savings, and capacity that weren’t possible in the past.

These applications increase revenue and help companies in all facets of business, like sales, project management, reporting, and more. Some of these workloads are perfect for the cloud while some are better suited for on-premise tenancy, but in many cases there is a concurrent need for both elements. The software-running-everything mentality enables this.

Thanks to a variety of cloud options, automation tools, and orchestration suites, the jobs of architecture and application delivery are much less of a headache. The enterprise will be free to create, tune, and maintain their own applications in any way they need. We see this in the growing DevOps movement, in rapid application deployment, and when resources can be spun up on demand. Geographic limitations, performance limitations, compliance, and other challenges that once faced the industry have been eliminated by the power of advanced clouds.

This is the software-driven reality of the future. In this software state, companies that take the technology lead will be the arbiters of their own world of software. Like it or not, ready or not, many companies will be in the software business, as supporting technologies continue to make it easier to deploy systems and software.

5. Cracks Will Form in the Giant Clouds

MonopolyAmazon’s AWS, Google, and Microsoft Azure continue to grow, and AWS is headed toward a virtual monopoly. There is more to this story, however, and all will not be as consolidated as it may currently seem. There is a major bubble in several mega companies, and I expect the one under AWS will be popped in the very near future. When that happens, we will see customers rotate into other companies for more stable, compliant, and rational solutions.

Connecting applications and orchestrating resources to fully utilize the cloud is a task that requires special tools and engineering. These tasks have a high cost, which is where many large providers make the bulk of their profits.

Getting attention and support from these giant cloud companies can be difficult – and sometimes downright impossible. People want cloud technologies service for those instances, but because cloud engineering is a quickly-evolving skill, it’s difficult to find adequate help.

This requires partnerships with cloud providers that provide excellent support. This means that many will feel the cold shoulder from the “support” that comes with large warehouse-style cloud providers. In a best-case scenario, support will be available at an astronomical price once customers sign up.

There will also be a group of smaller cloud providers that jumps into a price war and surrenders to AWS (and others). These providers will start to sell off to bigger companies, begin their fade, and eventually become forgotten.

6. AWS Split

On the heels of that last point, as predicted in April, AWS will spin off in 2016. Market conditions, profit margins, and continual underperformance of Amazon all point to this approaching inevitability. AWS has enjoyed huge profit margins, but challengers threaten that position, which has caused a continual race of price-slashing just to keep customers coming in the door. Once they’re in, the price reaming begins, and customers find their spending shoots through the roof.

Nonetheless, AWS is a rare bright spot in Amazon’s portfolio (from a financial standpoint), and you can bet that investors will be attracted to the type of business performance numbers that AWS produces.

7. Tarnish and Frenzy for Legacy Names

Some major names have made bad bets in recent years. Hewlett-Packard poured a lot of effort into its Helion cloud offering, which is now being shut down. Companies like HP are dividing, others are selling off, and others (like IBM) are buying up more cloud properties. The situation is a bit like musical chairs, and it has the hallmarks of a positioning frenzy that will continue in 2016.

The server hardware market is also transforming, and the average person would have a difficult time tracking who owns whom at the moment. IBM left the server game a year ago; HP is on a murky track yet still claimed some of IBM’s customers. Whether these shifts are transitional, reflective of current investments, or indicate an ongoing struggle in the lifecycle and value in the server market, it’s a pattern that will continue in 2016; however, Dell’s move to go private and now acquire EMC will insulate it from these trends. Dell will continue focusing on hardware, consistent with its history and gain credibility and share.

8. The Cloud Wars Are Over… and Cloud Profits Swell

Cloud giants are the lone exception to the frenzy trend above. These companies have been in the throes of a price war designed to get customers in the door. Companies like AWS, Microsoft, and Google have enjoyed massive profits at the expense of their customers and partners. Once customers get in, they face pricing premiums for additional services… and expenses begin to add up.

Large companies will continue to squeeze smaller companies (and even partners) out of business with copycat products; these products are profitable regardless of whether or not these companies are partners. In October, AWS launched a Business Intelligence tool called QuickSight, which threatens the business of a number of partners within the AWS ecosystem such as Birst, Domo, and Looker.

In the past, AWS jumped into direct competition with partners such as Dropbox, Iron.io, and BigML. Amazon CEO Jeff Bezos added another $9.3 billion to his personal wealth in 2015 through the familiar strategy of slashing prices and launching hundreds of new products to win market share. History tells us that this trend will continue.

Throughout this industry turmoil (and ensuing turmoil for customers), the future is held by small companies that can scale and take advantage of this opportunity. Differentiators will endure and thrive in the year ahead, while legacy companies will desperately continue to try to buy out anyone they can.

9. Reality Begins to Blur with Virtual and Augmented Reality

The public has been fascinated by virtual reality for many years, and in 2016 this technology will finally enter the public realm. One factor powering this move is marketing: putting people in virtual clothing, interacting in film, and conferencing in more immersive virtual environments. For these devices and systems to succeed, we must consider and account for a wide variety of sensors from the IoT. We’re talking about vast amounts of data, IoT devices connected to other IoT devices, and rapid analysis with little tolerance for latency.

We already live in an age in which we interact with computers beyond the traditional keyboard and mouse setup. Our voices can control our phones and many other objects. Technology offers new ways to interface with everyday objects like medical devices, household items, and prosthetics. In 2016, look for even more evolutions: ways of talking to your television, searching the web, and devices responding with the information you’re looking for in different ways.

Virtual reality is coming to many of the devices that we use today, and it’s powered by the cloud, analytics, and the IoT.

10. The Social Internet of Things

It sounds like a bad mash-up, but the Social Internet of Things (SIoT) is where the proliferation of smart devices rises to a new and interesting level – and it’s happening in an evolutionary way. It sounds a bit like Skynet from The Terminator, but the SIoT may take an evolutionary jump with cloud as a prime technology enabler in 2016. Everyday devices will be able to interconnect and be aware of each other.

Obviously devices from the same manufacturer have clear motives to interconnect: marketing, subscriptions, and unified status. However, that interconnectivity will expand to devices of the same nature, providing a network-based state of information about a place. People will benefit from effective interaction that’s powered by the growth made possible by cloud technology.

Transformation Ahead

Whether the consumer knows it or not, the influence of the IoT and big data can be felt in our lives and in technologies all around us. The IoT has slipped into the public consciousness and manifested itself in convenient data that’s easily available to us. From driverless cars and automated agricultural combines to drone delivery, everything is becoming increasingly interconnected. Our vehicles, smartphones, home appliances, and personal entertainment are linked to increase our level of convenience.

A Look at the Future

Data is shifting from cloud to cloud and from application to application. This interconnection of IoT device information is visible in many realms, including the worlds of entertainment, medical, manufacturing, media, and utilities. The power of cloud technologies have freed many companies from the complexities and management of infrastructure. Flexible, customized, and economical clouds mean big data can be enabled.

The world of information technology is continuing on its path of rapid transformation. Many names will be forgotten, but the biggest names will find a way to survive the bruising that lies ahead. The spirit of cloud – its innovation, enablement, and exciting opportunities – will set the path for 2016 and beyond. It is a great time to be alive and working to enable the future.

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