When will cloud computing start raining cash?

Cloud computing gets a lot of hype, but when will it start to generate a lot of cash? It may be sooner than you think.

Open-source cloud vendor Eucalyptus is rumored to be raising venture money at a $100 million valuation. Meanwhile, an Under The Radar conference dubbed "Commercializing the Cloud" is set for mid-April at which a host of new start-ups will talk about how they're set to shake the clouds free of billions of dollars in sales.

Will money fall from the sky? IBM

It can't come soon enough. For all the talk about cloud computing, the business of cloud computing is still in its infancy.

When will it grow up?

There's no shortage of exceptionally cool cloud technology. The most recent company to get buzz (and props from Amazon Web Services' chief evangelist) is JumpBox, which enables open-source applications to be delivered as virtualized cloud services.

But is there gold in them thar clouds?

Of course there is. The question is when it will materialize.

By some estimates, it already has. Gartner pegged the cloud computing market at $56.3 billion back in 2009, but that estimate took a pretty expansive view of what comprises the cloud, throwing SaaS and a host of other things into the cloud category.

What about infrastructure-as-a-service and more "traditional" definitions of cloud computing. How is that market doing?

Not nearly as well, though it is growing. Some have speculated that Amazon's EC2, the epicenter of IaaS, is now generating north of $220 million in annual revenue. That's a big number, but is it enough to warrant the cloud hype?

In a word, yes. That's because although we're still a year away from cloud computing trickling into the mainstream--and hence creating serious revenue waves--it's clearly coming. Talking with open-source cloud vendors such as Eucalyptus, VMops, and Open Nebula, as well as others like Northscale, VMware, etc., there's a tremendous amount of trial and evaluation happening right now, which should translate into paid engagements in the very near future.

So, $100 million may seem rich for Eucalyptus, given that it's still in its youth as a cash-generating business. But it's also a sign of good revenue to come in the next few months, not years.

About the author

    Matt Asay is chief operating officer at Canonical, the company behind the Ubuntu Linux operating system. Prior to Canonical, Matt was general manager of the Americas division and vice president of business development at Alfresco, an open-source applications company. Matt brings a decade of in-the-trenches open-source business and legal experience to The Open Road, with an emphasis on emerging open-source business strategies and opportunities. He is a member of the CNET Blog Network and is not an employee of CNET. You can follow Matt on Twitter @mjasay.

     

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