28 May Report: COVID-19 makes for a mixed bag for cloud service providers
After the recent round of earnings reports, it would seem as though the large cloud service providers are mostly immune to the effects of COVID-19, but there’s still an impact to account for.According to a report by Omdia, off-premise cloud service providers (CSPs) are experiencing mixed results due to COVID-19. CSPs need to shift their priorities to help end users, customers and partners pivot to the “new normal” brought on the coronavirus pandemic.
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The impact of COVID-19 is being felt across the data center compute, storage and networking markets as well as the applications that are running in the cloud, according to Omdia. For now, Omdia says that the cloud market is a tale of two trends during the COVID-19 pandemic.
“On one hand, data-center operators are experiencing massive surges in consumer usage of compute resources due to school closures, social distancing and government work-at-home mandates. This is making it increasingly imperative to provide a reliable, scalable and secure cloud,” said Devan Adams, principal analyst at Omdia, in a statement. “The new rules for society have created new norms, resulting in increased demand for e-learning, remote working, binge television watching and other at-home activities.
“On the other hand, IT infrastructure services—such as IaaS, CaaS, PaaS—are experiencing equally negative effects as many small-and-medium businesses (SMBs) either temporarily shut down or prepare to close their doors permanently as they are unable to remain financially viable.”
Based on those opposite effects for COVID-19, Omdia came up with two predictions on the impact over the next two years. This year, the software-as-a-service (SaaS) market revenue will increase by four to five percentage points compared to Omdia’s previous estimate. Next year, the increase for SaaS revenue will drop by two-to-three percentage points.
On the flip side, IT infrastructure service revenue will be down by two to three points this year versus previous estimates, and down one-to-two points next year.