Cloud Growth Lifts All Boats - Including UC

There is no denying the cloud is on a real roll. Gone are the days when IT questioned the validity of the cloud, fretting about security and just what would happen to all their jobs. Today the talk is more about what apps are appropriate for the cloud and when is it time to make the move.

VoIP Traction

VoIP is another hot area, as it replaces expensive, inflexible legacy telephony gear with services that are ever scalable in terms of features and reach. Visiongain (News - Alert) covers this market and saw last year as a watershed. “We believe that 2012 is a landmark year for VoIP services. With operator revenues from voice in decline; now is the time for ecosystem members to implement their VoIP strategies. The deployment of LTE and 4G networks will revolutionize VoIP services and have a transformative impact on the telecoms market,” the company said.

UC on Fire

While VoIP is hot, so is the VoIP-based unified communications market, which is poised for strong growth, according to research from Transparency Market Research “Unified Communications (News - Alert) Market - Global Industry Analysis, Size, Share, Trends and Forecast, 2012 – 2018”. According to the report, the UC market will grow an average of 15.7 percent per year from now until 2018, when it hits a market size of $61.9 billion.

ShoreTel (News - Alert) Grows a Third Based on Cloud

Research is one thing. Real financial results another. ShoreTel is in the cloud in a big way through VoIP and UC services. And this past quarter the company said its cloud revenue grew 32 percent year over year. That kind of number clearly outstrips the IT industry writ large.

“Our first quarter results continued to reflect our focused execution and the strength of our business model,” said Don Joos, president and CEO of ShoreTel. “In addition to the strong revenue growth and record non-GAAP profitability, I am also excited about the go-to-market and product roadmap initiatives on the horizon that we expect to be catalysts for growth going forward.  Our progress in the first quarter and our ability to execute our operational plan has set the foundation for the rest of our fiscal 2014.”  In the latest fiscal quarter, cloud related revenues was 36 percent of all money taken in, and this was up 22 percent compared to the same quarter a year ago. Meanwhile ShoreTel has Gartner on its side. In Gartner’s latest Unified Communications for SMB Report, ShoreTel got a “Strong Positive”, and this for the fourth year in a row.

Cloud Traffic not all Fluff

In a recent analysis, networking company Cisco found that cloud traffic will more than quadruple by 2017, growing at a CAGR of 35 percent.  And the cloud will come to utterly dominate data centers. Also by 2017 a full two thirds of data center traffic will be cloud traffic. And next year is the tipping point when cloud traffic represents the majority of data center traffic. There are economic implications for enterprises moving to this more efficient model, and at the same time global issues. More efficient use of energy has implications for global energy markets and pricing, global warming, and impacts how long certain sources such as fossil fuels may last.

Cisco also predicts cloud traffic around the world will increase 4.5 times over the next four years to an astonishing 5.3 zettabytes. Overall data center traffic will be 7.7 zettabytes. So what’s a zettabyte? How about 1 billion terabytes?

Cloud Drivers

So what is driving this dramatic cloud growth? Microsoft (News - Alert) asked 451 Research to examine what is driving shops to the cloud and learned that 52 percent of those asked claimed the cloud is driving new and realigned business strategies.  Nemertes Research believes the cloud is revolutionizing how IT operates. In its “Shift to ‘Enterprise Technology’ Relies Upon Vendor Partners for Managed, Cloud Services” report, Nermertes says smart shops are moving from a focus on Information Technology (IT) to Enterprise Technology (ET).  “Not only does this shift change the why business leaders view IT, it also alters the organizational structure of IT itself,” the report said. “In the ET world, the technology team becomes more strategic, and as a result, it relies more heavily on trusted partners to handle tactical functions—and in some cases, assist in strategic direction of the company,” Nemertes said. “By leveraging relationships with vendor partners, IT organizations can turn that ship. First, they must identify the nonstrategic, “keep the lights on” IT functions. Then, they must determine which functions they will turn over to a trusted partner. Ideally, the cost to outsource will be lower, by taking advantages of economies of scale. And the result will be more headcount IT leaders can devote to strategic, rather than tactical functions.”