Global Cloud Index: Traffic to Grow Sixfold by 2016

In the second annual Cisco Global Cloud Index (2011-2016), Cisco forecasts global data center traffic to grow fourfold and reach a total of 6.6 zettabytes annually by 2016. The company also predicts global cloud traffic, the fastest-growing component of data center traffic, to grow sixfold – a 44 percent combined annual growth rate (CAGR) – from 683 exabytes of annual traffic in 2011 to 4.3 zettabytes by 2016.

For context, 6.6 zettabytes is equivalent to:

• 92 trillion hours of streaming music – Equivalent to about 1.5 years of continuous music streaming for the world's population in 2016.
• 16 trillion hours of business Web conferencing – Equivalent to about 12 hours of daily Web conferencing for the world's workforce in 2016.
• 7 trillion hours of online high-definition (HD) video streaming – Equivalent to about 2.5 hours of daily streamed HD video for the world's population in 2016.

The vast majority of the data center traffic is not caused by end users but by data centers and cloud-computing workloads used in activities that are virtually invisible to individuals.

For the period 2011-2016, Cisco forecasts that roughly 76 percent of data center traffic will stay within the data center and will be largely generated by storage, production and development data. An additional 7 percent of data center traffic will be generated between data centers, primarily driven by data replication and software/system updates.

The remaining 17 percent of data center traffic will be fueled by end users accessing clouds for Web surfing, emailing and video streaming.

From a regional perspective, the Cisco Global Cloud Index predicts that through 2016, the Middle East and Africa will have the highest cloud traffic growth rate, while the Asia Pacific region will process the most cloud workloads, followed by North America.

Overview of the Latest Worldwide Market Study:

• The Cisco Global Cloud Index (2011-2016) was developed to estimate global data center and cloud-based Internet Protocol (IP) traffic growth and trends. The Cisco Global Cloud Index serves as a complementary resource to existing network traffic studies, providing new insights and visibility into emerging trends affecting data centers and cloud architectures. The forecast becomes increasingly important as networks and data centers become more intrinsically linked in offering cloud services.
• The Cisco Global Cloud Index includes a "workload transition" forecast, which shows the workload shifting from traditional data centers to more virtualized cloud servers.
• The forecast also includes a supplement on Cloud Readiness Regional Details, which examines the fixed and mobile network abilities of each global region (from nearly 150 countries) to support business and consumer cloud-computing applications and services.
• The Cisco Global Cloud Index is generated by modeling and analysis of various primary and secondary sources, including 40 terabytes of traffic data sampled from a variety of global data centers over the past year; results from more than 90 million network tests over the past two years; and third-party market research reports. 

"As cloud traffic continues to proliferate in a new world of many clouds, the Cisco Global Cloud Index provides all cloud computing stakeholders with a very valuable barometer to make strategic, long-term planning decisions. This year's forecast confirms that strong growth in data center usage and cloud traffic are global trends, driven by our growing desire to access personal and business content anywhere, on any device. When you couple this growth with projected increases in connected devices and objects, the next-generation Internet will be an essential component to enabling much greater data center virtualization and a new world of interconnected clouds," said Doug Merritt, senior vice president, Corporate Marketing, Cisco Systems.

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Europeans are Demanding More Open Video Calling

As video calling usage increases, 81 percent of Europeans say that they now see it as personally important for them that these communications technologies work together, according to the findings from a recent market study.

In a clear signal to the video communications industry, 86 percent want companies to agree to a common standard so that software and devices -- including popular video calling apps like Skype, Facetime, and Google Chat -- are able to communicate with one another.

Unfortunately, that is still not the case in video calling, as opposed to speaking on the phone or exchanging emails, where interoperability is already the norm.

Europeans appear to have a very healthy appetite for video communications. In a survey of 1873 consumers, conducted on behalf of Cisco Systems, nearly 40 percent of those who use video calling said they will use it more often in the next twelve months, whereas only 4 percent expect to use it less often.

Growing Applications for Video Calling

What particularly attracts people to video calling is that it allows them to talk face-to-face with friends and family across the world. However, they are just as enthusiastic -- and sometimes even more so -- about possible applications of video calling technology in areas such as healthcare, education, and in the workplace.

Of those surveyed, 80 percent see video calling as an important way for patients in distant rural areas to talk face-to-face to medical specialists in cities without travelling, while 69 percent believe the technology has an important role in enabling teachers and other educators to hold live lectures and classes by video calling and to interact with students in real-time.

However, survey respondents are even clearer in pointing out that they want multiple devices or programs made by different companies to be able to communicate with one another.

Of those surveyed, 81 percent indicate such communication to be extremely important to their use of video, an unambiguous indication that people have little tolerance for potential glitches caused by a lack of interoperability.

Given the size of its market share in particular, 78 percent of respondents believe that Microsoft should open its Skype video platform. Moreover, 72 percent deem Microsoft's decision not to make Skype interoperable to be unfair to its users.

Key Highlights from the Video Calling Survey

• 85 percent of respondents want companies to agree to a common standard for video calling so programs work together.
• 84 percent believe that video calling should be as easy as making a phone call.
• 79 percent want Skype to be interoperable with other video technologies.

This survey was conducted by Purple Strategies and based on 1873 telephone interviews. For additional details on related trends, view an infographic that outlines business leader thoughts about in-person and online video meetings.

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SMB Demand for Productivity Oriented Mobile Apps

Small businesses account for two-thirds of all new employment in America, according to the historical U.S. government statistics. Developing trends within this key sector are therefore a leading market indicator of the nation's economic stability and forward-looking performance.

That said, new U.S. business spending research, that was performed by In-Stat, would indicate that some things are starting to trend upwards.

According to the latest market study by In-Stat, small and medium businesses (SMBs) plan to increase their spending on wireless data services by 42 percent from 2010 to 2015.

Moreover, U.S. small office and home office (SOHO) businesses will lead the category, forecast to increase their spending by over 46 percent on wireless data from 2010 to 2015.

New Productivity Oriented Wireless Data Applications

"Voice has become a commodity, with growth in voice services essentially being stagnant across all sizes of business," says Greg Potter, In-Stat Data Analyst.

Messaging services have been in demand, but the new procurement outlook is stagnant, with marginal increases or decreases -- depending on the the size of business.

In-Stat believes that future growth is all about providing data access to smartphones, business-centric media tablets, and netbook PCs. Clearly, new productivity-oriented mobile apps and related cloud based services are helping to stimulate this demand.

According to the latest market study by ABI Research, users of enterprise B2E (business-to-employee) and B2C (business to customer) smartphone and media tablet mobile applications (apps) are forecast to grow at a CAGR of nearly 90 percent -- and exceed 830 million active users by 2016.

In-Stats latest market study highlights include:

• SMB businesses in total (SMB includes SOHO, small and medium businesses) consume about half of all wireless services on a revenue basis.
• The consumption jumps to almost three-fourths when one is only considering corporate liable expenditures.
• Total mobile handset spending is set to rise over 10 percent from 2010 to 2015.
• The construction vertical segment will spend 120 million in the wireless device segment in 2012.
• In 2013, the retail trade segment will spend 2.8 billion in wireless voice services.

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Managed Cloud Services: an Aggregated Market Forecast

Broadband service providers gained a 5 percent share of nearly $20 billion annual cloud services market, with 25 percent compound annual growth rate (CAGR) forecast to 2013 -- according to the latest aggregated market research assessment by STL Partners.

Based upon their observations, most market forecasts estimate that the total cloud services market will reach $45-50 billion revenue by 2013 or 2014 -- including the Bain forecast that was previewed at the "Americas Telco 2.0 Brainstorm" event, which was hosted by STL Partners in April 2011.

At their EMEA brainstorm event, the attendees were given an overview of the component cloud markets and examples of different cloud service approaches. They were then asked for their views on the potential share that service providers might garner from the addressable cloud revenue opportunities within each category.

In total, the attendee consensus view amounted to service providers gaining 18 percent of the revenue for cloud services -- within the next three years.

The following chart contains a summary of their findings (click to enlarge):

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Widespread Private and Public Cloud Adoption

Cisco released the final installment of the Cisco Connected World Report, an international study about the behavioral trends of workers in accessing information anywhere, with any device, and the ability of information technology (IT) professionals to address their needs.

The latest results focus on data center, virtualization, and cloud computing trends, and evolving IT roles, in the context of increasingly mobile and distributed workforces.

The study found that global IT professionals are creating new job opportunities by increasing collaboration among teams in the data center, and adopting new technologies such as virtualization and cloud computing. But they’re also struggling to maintain security and data governance as employees demand more offsite access to networks and information.

Comparing Cloud Adoption Rates by Country
For example, across the 13 countries in the global study, 52 percent of the IT professionals stated they use or plan to use cloud computing, while much higher cloud adoption rates are predicted in Brazil (70 percent), China (69 percent) and India (76 percent).

Across the world, respondents rated the following as their top data center priorities for the next three years: improve agility and speed in deploying business applications (33 percent), better manage resource capacity to align demand and capacity (31 percent), increase data center resilience (19 percent), and reduce power and cooling costs (17 percent).

This report adds to the initial survey results released in October, which revealed that workers want flexible access to corporate information from any mobile device, anywhere, anytime, and to the results released in November -- which revealed disconnects in worker expectations around information access, IT policies and employee awareness of policies.

The latest survey results examine how IT managers are evolving their data centers and taking advantage of new technologies, while working to accommodate trends in the workplace like social media, device proliferation, video and an increasingly mobile workforce.

Summary of Cloud Computing Trends

• Cloud use today: Across the study's 13 countries, only an average of 18 percent of respondents are using cloud computing today, while an additional 34 percent plan to use the cloud.
• Top cloud users today: Brazil (27 percent), Germany (27 percent), India (26 percent), U.S. (23 percent) and Mexico (22 percent) top the list of countries that are already taking advantage of cloud computing, exceeding the average (18 percent) across all countries.
• Future cloud use: A large majority (88 percent) of IT respondents predict that they will be storing some percentage of their company's data and applications in private or public clouds within the next three years.
• Private clouds: One in three IT professionals said more than half of their company's data and applications will be in private clouds within the next three years. Private cloud adoption was predicted to be higher in Mexico (71 percent), Brazil (53 percent) and the U.S. (46 percent.)
• Timing for public clouds: Of those respondents that will use public clouds, one of every three (34 percent) plan to deploy within one year, and 44 percent predicted their companies would use public clouds within the next two years; 21 percent are expected to do so within two to three years.

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Cloud Services Adoption in Asia-Pacific

It's the time of year when most business technology market research and consulting companies release their predictions for the new year. In its annual outlook for 2010, IDC predicts the Information and Communications Technology (ICT) spending and growth in the Asia-Pacific excluding Japan (APEJ) region will reach $184 billion -- with a 7.7% growth over this year.

IDC predicts most growth will come from India and China, although all countries are expected to experience varying degrees of growth.

"While budgets are still tight, and the buying patterns may have changed irrevocably from what the ICT industry has been accustomed to, the fact remains that there is cautious optimism in the market with some interesting pockets of surprising growth," said Simon Piff, Head of IDC's Asia-Pacific Predictions Committee for 2010.

The net result of the economic slowdown has been an overarching change in how and why companies make new business technology investments.

Proven Technologies Ready for Adoption
IDC foresees projects that generate immediate ROI and tangible improvements in managerial and operational efficiencies will continue to be the ones that garner quick executive buy-in.

The key enabling technologies for 2010 are not necessarily new, as much as they are a more mature and robust implementation of proven solutions that have been available for a while.

Cloud Computing, last year's emerging focus area, will move from being merely a buzzword to a deployment reality -- as service providers address the challenges of providing managed cloud services and organizations realize the flexibility that these solutions can provide.

In fact, cloud services ranks number one on the “Top Ten key IDC predictions that will shape the ICT industry in APEJ in 2010.”

The Maturing of Cloud Services
According to IDC's assessment, service level agreement (SLA) options will improve. They believe that the combination of five-nines performance guarantees -- plus robust business continuity and disaster recovery (BCDR) capabilities -- will be the compelling new adoption momentum that accelerates cloud service growth.

In 2010, the large organizations that are ready to deploy managed cloud services will do so, demanding the same SLAs with BCDR capabilities.

IDC's annual predictions for ICT includes the latest research results from their 1000+ analysts. This insight was followed by an extensive regional review to weigh in on key industry events, typical user characteristics, vendor strategies and economic measures, that help define the technology trends which would impact and drive the ICT market in the Asia-Pacific region for 2010.

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Culture is Key to Advanced Collaboration

Organizations that deploy the most advanced Internet protocol-based collaboration technologies achieve more than twice the return on their collaboration investment and perform better than their less collaborative peers, according to a thought-provoking Frost & Sullivan market study.

"Meetings Around the World II: Charting the Course of Advanced Collaboration," sponsored by Verizon and Cisco, examines how busy professionals in businesses and government agencies use advanced collaboration tools such as voice-over-Internet Protocol (VoIP), instant messaging or meeting via high definition video or Cisco TelePresence to get their work done.

The study is the first to develop a model for measuring a return on collaboration investment, the Return on Collaboration (ROC) Index. It establishes a progressive impact of deploying advanced Unified Communications and Collaboration (UC&C) technologies on business performance and measures improvements in areas such as research and development, human resources, sales, marketing, investor relations and public relations.

Advanced Collaborators Harness Competitive Advantage
The study also identified emerging business technology adoption trends and attitudes across the globe. Key findings from the study include:

• Businesses and government agencies deploying increasingly more sophisticated collaboration tools -- such as VoIP soft phones, immersive video and fixed mobile convergence -- saw a corresponding improvement in business results relative to the amount invested.
• The overall average ROC score was 4.2 -- meaning organizations received an average return of four times their investment in deploying collaboration technologies.
• The majority of organizations deploying UC&C report they are more successful than their peers compared to those not deploying UC&C (70 percent versus 47 percent).
• Of organizations deploying UC&C, 40 percent plan to increase spending.
• VoIP is leading the way for delivery of advanced communications and collaboration applications.
  

Why Corporate Culture is a Defining Factor
If you're thinking that simply deploying online collaboration tools will deliver results similar to the leaders -- then think again. Your work environment is truly instrumental to success.

How do the Advanced Collaborators attain an ROC score of 6.1? These organizations tend to have "open" entrepreneurial corporate cultures where individuals are accessible, and there's regular cooperation between business units.

"Meetings Around the World II confirms and extends the key findings of the original study and builds on those conclusions. This latest research shows adopting progressively more advanced unified communications and collaboration tools can help organizations achieve a corresponding return on collaboration and improvement across all business functions. This return was most dramatic in the areas of sales, marketing and research and development" says Brian Cotton, vice president for Information and Communications Technologies for Frost & Sullivan.

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Cloud Services Interest Erupts in Groundswell

The anticipated benefits from adopting managed cloud services have reached the executives suites of many corporations. Proactive CEOs and CFOs are pushing their IT leadership team to seek out actionable information and guidance.

There's also a constant stream of service providers announcing new offerings -- and the momentum is becoming a global phenomenon. As a result, Forrester Research has witnessed an expanding number of client inquiries around cloud computing.

The acceleration in market development has been building for some time now. Forrester analysts responded to more than 264 client inquiries about cloud computing between January 2008 and April 1, 2009 from companies of all sizes and industries.

IT Teams are Adopting Cloud Strategies
Once considered a niche business technology where awareness was viewed as optional, Forrester now says that knowledge of cloud computing has become an IT organization necessity. Interest is fueled by expectations of major cost savings, scalable and dynamic environments, on-demand infrastructure, and much smaller maintenance requirements.

In a recent research note, Forrester outlined the most common questions about cloud services.

Twenty-three percent of cloud computing inquiries were about the types of applications that companies were moving into the cloud and how best to leverage cloud service environments. People want to know the spectrum of possibilities -- what apps to put in the cloud?

Some questions are motivated by the need for improved business agility. The promise of better scalability and versatility makes cloud services appealing. Moreover, innovation is often stifled by the investment needed to acquire and deploy new IT infrastructure and associated application environments.

Fifteen percent of the inquiries were on challenges, risks, and the effects of cloud-based services on IT -- such as, what are the typical use cases, and how much enterprise data should live in public clouds?

Clouds are Coexisting in Hybrid Models
Forrester believes questions regarding when to build internal clouds, and the "internal vs. external" debate, will be at the forefront of cloud computing due diligence in the coming months -- which cloud service scenario is a best-fit for our particular needs?

Forrester concluded from their client engagements that cloud computing represents a significant shift in the way IT operates today -- it's not a passing fad, it's a trend that's based upon solid business need for a change in the status quo.

The following are Forrester's recommendations:

• Know your costs, requirements, and potential areas for cost saving.
• Businesses with basic requirements can begin to pilot public clouds.
• Evaluate internal clouds, while also considering a hybrid model.
• Formulate standards, and a cloud policy to govern procurement.
  

As the momentum for managed cloud services continue to build in 2009, we'll be on the lookout for additional sources of insight.

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