This is the third in a series of reports on cloud infrastructure services. It takes an in-depth look at the global cloud compute-as-a-service market, and examines events and trends that are shaping the industry – including how service providers are evolving and adapting their offerings, which providers are gaining mindshare among leading Web destinations, and what is on the top of customers\' minds as they consider a move to cloud services. Market-sizing analysis and projections for the CaaS market through 2014 are included, as well as our current vendor leaderboard.

1. CLOUD INFRASTRUCTURE SERVICES
HERE COME THE HEAVYWEIGHTS - 2011 EDITION
HOSTING
DECEMBER 2011
451 RESEARCH: HOSTING
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2. REPORT SNAPSHOT
TITLE Cloud Infrastructure Services: Here Come The
Heavyweights – 2011 Edition
ANALYSTS Doug Toombs, Research Manager – Tier1 Research
RELEASE DATE December 2011
LENGTH 40 pages
ABOUT THIS REPORT
Over the past two years, the marketplace for cloud computing has gone through
dramatic and substantive changes. In the next several years, cloud computing is
projected to have stunning growth rates across all the major categories of service –
IaaS, PaaS and SaaS. With a projected growth rate greater than any other sector of the
service provider marketplace that Tier1 Research currently tracks, the overall combined
cloud services market is expected to reach $23 billion by 2014.
To that end, service providers are responding to the changes in the market by updating
their service catalogs to become more cloud-friendly. T1R expects that in the years
ahead, the lines and distinctions between traditional hosting descriptors – shared,
dedicated, managed – will become less relevant, as customers make more calculated
decisions based on financial considerations between dedicated systems and cloud/elastic
capacity needs.
Customer adoption of cloud computing services is showing a steady upward trajectory
within the data that 451 Research collects, with 20-25% of customers surveyed
indicating they are using some type of public cloud computing service – SaaS, PaaS
or IaaS. Among the workloads customers are moving into the cloud, development
and testing are obvious, but customers are also turning to cloud for collaboration
approaches, CRM and BC/DR needs – functions that could find their way to a cloud
product just as easily from a business unit as from centralized IT.
Finally, one of the most interesting data points to come out of 451 Research’s
acquisition of TheInfoPro and ChangeWave Research is input on what criteria customers
consider most important when evaluating cloud service providers. Perhaps counter-
intuitive to what service providers might expect, ‘technical specifications’ such as
network, compute and storage architectures seem to have the least level of importance
to customers, where as more ‘business-oriented’ attributes such as SLAs and support
models rank highest.
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3. COMPANIES INCLUDED IN THIS REPORT
Amazon Hosting365
1&1 Internet Hostway
8x8 IBM
AdvancedHosters IKANO Communications
Akamai Technologies Internap Network Services
Amazon.com Joyent
AT&T KKR
BlueHost Layered Technologies
BlueLock LeaseWeb
Cbeyond Level 3 Communications
CenturyTel Internet Holdings Liquid Web
(CenturyLink)
MaximumASP
Cogent Communications
Media Temple
Datapipe
NeoSpire
Defender Technologies Group (Virtacore)
netdirekt
Dimension Data Holdings
Network Solutions (Web.com)
Endurance International
New Dream Network (DreamHost)
Fusepoint Managed Services (Savvis/
NTT America
CenturyLink)
OneNeck IT Services
GI Partners
OpSource
GoGrid
pair Networks
Greensoft Solutions (GSI Hosting)
PEER 1 Hosting
Group NBT
Quantcast
HgCapital
Rackspace
Hosted Solutions
Savvis
Hosting.com
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4. COMPANIES INCLUDED IN THIS REPORT
ServePath
ServInt
Silver Lake Partners
SingleHop
Singtel
SoftLayer Technologies
Standing Cloud
SunGard Availability Services
TDS Telecommunications
Technology Crossover Ventures
Terremark Worldwide
The Go Daddy Group
tw telecom
Verizon Business
Verizon Communications
VISI
VMware
Web.com
WEBZILLA
Windstream Communications
Yahoo
Zerigo
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© 2011 THE 451 GROUP, 451 RESEARCH AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.

5. TABLE OF CONTENTS
EXECUTIVE SUMMARY 1
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . 1
KEY FINDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . 2
METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . 2
DEFINING THE CLOUD COMPUTING MARKET 4
CORE CLOUD ATTRIBUTES . . . . . . . . . . . . . . . . . . . . . 4
TYPES OF CLOUD COMPUTING. . . . . . . . . . . . . . . . . . . . 4
FIGURE 1: Market Taxonomy 5
IAAS DEFINED . . . . . . . . . . . . . . . . . . . . . . . . . . 5
COMPUTE-AS-A-SERVICE MARKET OVERVIEW 6
COMPUTE-AS-A-SERVICE MARKET SIZE, 2010-2014 . . . . . . . . . . . 6
FIGURE 2: Compute as a Service Market Sizing and Projection 7
FIGURE 3: 2010 & 2014 Compute ‘as a Service’ Revenue by Geography 8
COMPUTE-AS-A-SERVICE GLOBAL LEADERBOARD . . . . . . . . . . . . 8
FIGURE 4: 2010-2014 Compute ‘as a Service’ Global Leaderboard 9
PROVIDER SHARE OF TOP 100,000 WEB SITES . . . . . . . . . . . . . . 10
FIGURE 5: Share of Top 100,000 Websites Attributed to Providers 11
CLOUD CUSTOMER BUYING TRENDS 15
CLOUD ADOPTION BY BUSINESSES SURPASSES 20% IN 2011 . . . . . . . . 15
FIGURE 6: Public Cloud Computing Adoption Trend 15
WHICH WORKLOADS ARE COMPANIES MOVING TO THE CLOUD?. . . . . . . 16
FIGURE 7: Workloads Moving to the Cloud 16
RELIABILITY NOT A SIGNIFICANT CONCERN . . . . . . . . . . . . . . 18
FIGURE 8: Perceptions of Cloud Reliability 18
FIGURE 9: Effects of AWS Outage on Future Cloud Use 19
WHAT ATTRIBUTES ARE CUSTOMERS LOOKING FOR IN CLOUD
SERVICE PROVIDERS . . . . . . . . . . . . . . . . . . . . . 19
FIGURE 10: Service Provider Selection Criteria 20
SECURITY AND CHANGE ARE STILL LARGEST OBSTACLES . . . . . . . . . 21
FIGURE 11: Reasons for Not Using Cloud 21
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6. PROJECTED CLOUD SPENDING CHANGES IN 2012 . . . . . . . . . . . . 22
FIGURE 12: Cloud Spending Changes in 2012 22
EVENT ANALYSIS 23
CLOUD OFFERINGS EVOLVING INTO MANAGED CLOUD . . . . . . . . . . 23
FIGURE 13: Hosted Services Consolidating Around Axis of
Services, Elasticity 24
BLENDED CATALOGS OF OFFERINGS GAINING TRACTION . . . . . . . . . 24
SERVICE PROVIDERS LAUNCHING OFFERINGS ON TOP OF
AMAZON AWS . . . . . . . . . . . . . . . . . . . . . . . . 25
VMWARE LINKS PROVIDERS’ CLOUDS WITH GLOBAL CONNECT . . . . . . . 25
OPEN DATA CENTER ALLIANCE PUBLISHES CLOUD USAGE MODELS . . . . . 26
OPENSTACK PROJECT KICKS OFF, GROWS AND LAUNCHES CLOUDS
WITHIN 18 MONTHS . . . . . . . . . . . . . . . . . . . . . 27
M&A ACTIVITY BRISK THROUGH 2010-2011, NO SIGNS OF SLOWING DOWN . . 28
FIGURE 14: Merger and Acquisition Activity, 2009-11 29
THE $64,000 QUESTION: DOES CLOUD EVENTUALLY
CANNIBALIZE HOSTING? 30
FIGURE 15: Projected Impact of Cloud Computing on Hosting
Revenues through 2013 31
APPENDIX A: DEFINITIONS AND DELIVERY MODELS FOR
THE CLOUD 32
CORE CLOUD ATTRIBUTES . . . . . . . . . . . . . . . . . . . . . 32
FIGURE 16: Cloud Infrastructure Criteria 32
WHAT ARE THE CLOUD DELIVERY MODELS? . . . . . . . . . . . . . . 36
APPENDIX B: HOSTING TAXONOMY 38
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7. ABOUT 451 RESEARCH
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Group, is focused on the business of enterprise IT innovation. Clients of 451
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— rely on 451 Research’s insight through a range of syndicated research and
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