What is Impact of Spy Scandal on U.S. Cloud Computing Business?

By

Many observers claim that the future of cloud computing after the Edward Snowden revelations about National Security Agency spying could represent a watershed moment for the broader cloud computing industry.

Among the effects are a predicted shift of market share from U.S. suppliers to suppliers from other regions, as enterprises start to buy cloud computing services from local and national or regional suppliers other than U.S. suppliers.

Cisco reported a second quarter 2013 sales drop of 10 percent in China, a development Cisco attributed to the impact of revelations about U.S. National Security Agency spying. But the dip in China sales also could also be an act of retaliation by China against the U.S. government ban on purchases of services from firms using Huawei gear.

IBM reported in October 2013 a 22 percent drop in its China revenue, leading to a decline of four percent in third-quarter 2013 profit for the world's biggest technology services company.

But the impact is hard to discern in forecasts released by the Telecommunications Industry Association for U.S. revenue growth. TIA’s 2014 U.S. cloud computing revenue forecast calls for $67.8 billion in revenue, up from $56.2 billion in 2013 and $47 billion in 2012.

Those years cover the 2013 Edward Snowden revelations, as well as the year before and after. The TIA forecast calls for $107 billion in cloud computing revenues in 2017.

One might argue the impact of the spying scandal is hard to quantify, as it will be expressed primarily as a loss of new sales to competitors based elsewhere, and perhaps slower growth than might otherwise have been the case.

On the other hand, there are counterbalancing trends at work. U.S. enterprises and smaller businesses are shifting information technology spending from “premises” to “cloud” sources.

So, despite any potential sales headwinds created by the spying threats, business customer spending on cloud services seems destined to grow, irrespective of new security threats. After all, many customers could conclude, the upside is greater than the potential downside.

Spend is shifting from internal to external, in direction of cloud services, says Arthur Gruen, principal at Wilkofsky Gruen Associates.

It is hard to see new machine to machine apps being abandoned because security issues now loom larger. Instead, entities are likely to pursue M2M apps because there are clear business advantages, and simply spend more money on security. 




Edited by Adam Brandt

Contributing Editor

SHARE THIS ARTICLE
Related Articles

Coding and Invention Made Fun

By: Special Guest    10/12/2018

SAM is a series of kits that integrates hardware and software with the Internet. Combining wireless building blocks composed of sensors and actors con…

Read More

Facebook Marketplace Now Leverages AI

By: Paula Bernier    10/3/2018

Artificial intelligence is changing the way businesses interact with customers. Facebook's announcement this week is just another example of how this …

Read More

Oct. 17 Webinar to Address Apache Spark Benefits, Tools

By: Paula Bernier    10/2/2018

In the upcoming webinar "Apache Spark: The New Enterprise Backbone for ETL, Batch and Real-time Streaming," industry experts will offer details on clo…

Read More

It's Black and White: Cybercriminals Are Spending 10x More Than Enterprises to Control, Disrupt and Steal

By: Cynthia S. Artin    9/26/2018

In a stunning new report by Carbon Black, "Hacking, Escalating Attacks and The Role of Threat Hunting" the company revealed that 92% of UK companies s…

Read More

6 Challenges of 5G, and the 9 Pillars of Assurance Strategy

By: Special Guest    9/17/2018

To make 5G possible, everything will change. The 5G network will involve new antennas and chipsets, new architectures, new KPIs, new vendors, cloud di…

Read More