The $270 Billon Cloud Computing Market

By Douglas A. McIntyre Published Mar 7, 8:25AM EST

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With every major tech company in the world chasing part of the cloud computing market, what are they fighting for? Close to $300 billion. The business, however, may not be terribly profitable.

According to Market Research Media:

The global cloud computing market is expected to grow at an 30% CAGR reaching $270 billion in 2020, concludes the latest research report covering the cloud computing products, technologies and services for the global market

The base year for the forecast is 2015.

As huge corporations jockey for leadership in the cloud business, price may be as important differentiator as anything else. Amazon.com Inc. (NASDAQ: AMZN) dropped the price of its product last year as a means to match a discount offered by Google Inc. (NASDAQ: GOOGL).

ALSO READ: Businesses That Will Build Future Growth at Amazon and Google

The Amazon Web Services cloud business eventually could be larger than Amazon’s e-commerce business, says founder and CEO Jeff Bezos. Since Amazon’s core business has revenue of nearly $100 billion a year, Bezos might assume that Amazon will have a huge share of the market within a few years. Among the companies chasing Amazon are Microsoft Corp. (NASDAQ: MSFT), where new CEO Satya Nadella has made cloud revenue his top priority. As last quarter’s earnings were released he commented:

Microsoft is continuing to transform, executing against our strategic priorities and extending our cloud leadership. “We are taking bold steps forward across our business, and specifically with Windows 10, to deliver new experiences, new categories, and new opportunities to our customers.

Deeply troubled International Business Machines Corp. (NYSE: IBM) has made cloud progress a priority as well. The company recently announced it would invest $4 billion this year to boost cloud and mobile initiatives to push IBM revenue in these business to $40 billion by 2018. The number presumes IBM will end up with a large piece of the cloud market.

As dozens of large companies press to get a portion of what will clearly be a market with hundreds of billions of dollars, and as start-up firms target the same business, not everyone can have a double-digit piece of $300 billion. Some companies have to lose, particularly if price is a key to winning.

ALSO READ: Alibaba Moves Into Cloud Computing, Challenging U.S. Tech Giants

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.