What is Cloud Computing?

Cloud computing is another stage of Internet evolution, coming in the form of a virtualized and scalable web hosting and offers more advantages than traditional web hosting. The Cloud refers to a collective of hardware, storage, and network devices that deliver end-users the services that they require. Cloud computing allows users to avail of services over the Internet whenever and wherever they need it. It simply means that instead of using your own IT system, equipment, and software, you can opt for a service that you subscribe to on a monthly basis.

Cloud computing allows business owners to streamline their processes and reduces the costs of hardware and IT maintenance. The burden of responsibility in maintaining the hardware and the server falls in the hands of the service provider. Cost effectiveness is one of the most dominant benefits of Cloud computing, as businesses no longer have to keep up with the finances of upgrading their hardware and servers. Instead, businesses will be able to enjoy the upgrades of the servers and hardware as their service providers upgrade. Flexibility is also another benefit of Cloud computing, as systems can be upgraded instantly to suit your business’ needs.

The growth of Cloud computing

MarketsandMarkets published a report that states that the Cloud community market will be worth $2.4B by 2018. This report also coincides with another report from Siemer and Associates that states that the software-as-a-service market will grow by 16.8% to $16.7B in 2013.

The MarketsandMarkets report entitled “Community Cloud Market (By Components [Server, Storage Devices, Network Equipments], By Verticals [Healthcare, Finance, Government, Transport and Logistics, Gaming, Education]) – Global Advancements, Market Forecasts and Analysis (2013 – 2018)“ defines the global cloud community into different sub-segments with their own in-depth analysis and forecast of revenues. It also identifies the different challenges and drives for this market, including opportunities and trends for the next 5 years.

The community cloud market is valued at $566.1 million as of 2013 and will grow to $2.49 billion by 2018, with a CAGR of 34.5% from 2013 to 2018. North America is predicted to be the biggest market in terms of revenue contribution. The European region is expected to experience market traction.

Over the past few years, the demand for cloud services has been significant, particularly in industries that require data relay and high performance computing and services. The added benefits of security, reduced infrastructure, and reduced operating costs have also increased the demand for Cloud services.

The NSA threat to Cloud market

Another report states that the NSA will drive away as much as $35 million dollars of Cloud business from the USA over the next three years.

Non-profit organization called the Information Technology and Innovation Technology created the said report and stated that the Europeans are moving away from the USA cloud providers due to the recent issues of surveillance and privacy, thus creating a huge impact on the US Cloud market.

Because it’s a rapid growing market, Cloud providers in the USA are tasked with not only keeping their customers but also recruit new ones, which could prove to be more of a challenge in light of the recent NSA actions.

US Cloud market could lose as much as $21.5B by the end of 2016, indicating a 10% loss of foreign market to their European and Asian competitors. At the same time, the US Cloud market could also lose $35B over the same time frame, which would bring their total losses to 20% from foreign competitors.

A survey done by the Cloud Security Alliance showed that 10% of its member respondents cancelled a project with one of many US-based Cloud providers, and more than half of their member respondents indicated that they are less likely to avail of US-based Cloud providers after they learnt of NSA’s PRISM Program.

Daniel Castro, senior analyst with the Information Technology and Innovation Foundation and author of the report, says that “And the percentage lost to foreign competitors could go higher if foreign governments enact protectionist trade barriers that effectively cut out US providers. Already the German data protection authorities have called for suspending all data transfers to US companies under the U.S.-EU Safe Harbor program because of PRISM.”

The PRISM Program = Cloud’s Demise?

The National Security Agency or more popularly known as the NSA has created a top-secret program called the PRISM, which allows agencies like the FBI and NSI direct access to central servers at 9 US Internet companies. The program has allowed authorities to collect information from millions of users like video chats, audio chats, photographs, email correspondence, and other documents.

The PRISM Program is the first of its kind and keenly focused on foreign communications traffic that go through US-based servers when sent from one overseas location to another. While it may sound like a complete and total invasion of privacy, President Barack Obama assures US citizens that the PRISM Program only sifts through foreign data.

The PRISM Program allows NSA to collect data directly whilst the court “agreed to certify periodically that the government had reasonable procedures in place to minimize collection of ‘US persons’ data without a warrant.” In simpler terms, US authorities will be able to collect data from US persons without a warrant.

US citizens are paranoid as to the scope of the PRISM Program’s reach in terms of data collection, but the Director of National Intelligence claims that data collection is merely a process to protect the USA from various threats. He also condemned the unauthorized and wrongful disclosure of the PRISM Program despite being an important and legal program.

As a result, US-based Cloud providers are not exempted from the reach of the PRISM Program. Businesses from overseas will think twice about engaging in Cloud services based in the USA out of fear of privacy invasion.

This will not only impact the Cloud providers but also web hosting providers scattered all across the USA.

However, the threat from the PRISM Program to the US Cloud market is still a bit too early to tell if it is indeed harmful.

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