Twenty-five percent of the top 100 IT infrastructure providers will not exist in two years, according to Gartner. Speaking at the Gartner Data Center Conference, analyst William Maurer said cloud providers will be acquired or forced out of business in large numbers, posing a risk to cloud adopters.
The audience at Maurer’s presentation was polled on the extent to which “risks associated with outsourcing some/all of your data center solutions to one or more of the ‘aaS’ models” are preventing them from going forward with cloud adoption.
Only 12 percent answered that there was little risk, while nearly 50 percent saw “a great deal of risk” in cloud-based solutions. Despite this, Gartner sees cloud adoption reaching 80 percent of organizations in 2013.
“There is a real risk,” said Maurer. “One in four vendors will be gone for whatever reason — acquisition, bankruptcy,” but acquisition will be the main exit. “You need to make to make sure that your service providers are successful. Give them a chance to make a reasonable return on their investments, give them a chance to make some money. Don’t take all the money off the table, because if you do, you are not going to have a lot of them around.”
Concerns about risk may drive cloud adopters to larger vendors, but smaller providers can balance those concerns with niche appeal or better prices.
The industry’s consolidation trend was examined in a report by Cowen and Company earlier in December. 90 percent of those surveyed for the Cowen and Company report expect a significant amount of industry consolidation in the next three years, though most expect to be doing the acquiring more than being acquired.
2013 has seen many acquisitions, particularly in the latter half of the year, perhaps indicating that the consolidation push has already begun.