Evolution of Cloud Computing Market

Phase 1: Monolithic (Early). Early cloud computing services will be based on proprietary/internal architectures – islands of cloud services delivered by megaproviders. This is what Google, Salesforce and Microsoft look like today.

Phase 2: Vertical Supply Chain (2+ Years). Over time, some cloud providers will leverage cloud services from other providers (for example, ISVs moving into SaaS on top of Microsoft’s Azure Services Platform, use of Force.com, use of Google App Engine). Still proprietary islands, but ecosystems starting to build.

Phase 3: Horizontal Federation (4+ Years). Smaller providers will federate horizontally to gain economies of scale (and efficient use of assets) – also, enterprises will leverage horizontal federation for peak capacity (overdraft protection, cloudbursting). There will be more choices at each layer of cloud computing, and standards will gain momentum.