Gartner: Cloud putting crimp in traditional software, hardware sales

Enterprise spending on cloud computing growing at a faster rate than overall IT spending will pose a challenge to legacy hardware and software vendors, forecaster Ed Anderson says.

is expected to grow 19% in 2012, becoming a $109 billion industry compared to a $91 billion market last year. By 2016, it's expected to be a $207 billion industry, according to Anderson's latest findings. That compares to the 3% growth expected in the overall global IT market. While it's true that the $109 billion cloud market represents just a 3% chunk of the overall $3.6 trillion spent on IT globally, Anderson says it's still responsible, in part, for a slowdown in growth for traditional on-premise hardware and software sales.



Software delivery is shifting from a traditional license sale to install an application on-premise, to a per-user cloud-based software-as-a-services (SaaS) model. Meanwhile, hardware is shifting from on-premise capital expenditures to off-premise operational expenditures.

In the long term, Anderson says, the cloud model will create new IT spending opportunities. Integration, customization, hybrid cloud and on-premise cloud installations will all grow in significance as cloud adoption continues. "There will be some short-term decline, but in the long term, it will level out," he says.