It’s difficult to participate in any discussion of digital trends without hearing about “the cloud.” Most people would say they know what it is (and they probably have an idea), without knowing how it works. Or that it is set to revolutionize large-scale data storage.

According to Syntaxthe cloud computing industry grew in value from $46 Billion in 2008 to $150 Billion in 2014. Thats a 6-year growth of 300%. Forbes estimates by 2014, businesses in the U.S. will invest more than $13 Billion on cloud computing and managed hosting services.

 

What is “the cloud”?

In the simplest terms, the cloud allows for the storage and access of large amounts of data within a network – rather than across hard drives. Hosting companies purchase digital “real estate” with which to store and manage data across many physical locations.

Storage on hardware has limits, mostly because devices at market price have fixed capacity, and increasing storage capacity is not scalable. In order to maximize storage with limited capital investment, companies invest in the cloud. Investment is further optimized through increased productivity: with a network connection, information and deliverables can be accessed anywhere, anytime and from any device.

According to SalesForce, “Where in the past, people would run applications or programs from software downloaded on a physical computer or server…cloud computing allows people [to] access the same kinds of applications through the Internet.” In its current state, the cloud is estimated to have a capacity of 1 Exabyte.

Security

As cloud computing gains popularity, the parameters of operating across industries has forced compliance. For one, cloud servers hosting medical information must be HIPAA-compliant. That hosts have been able to successfully meet government and industry compliance standards indicates a trend towards security set to erase the major drawback of cloud storage. Many companies are also automatically encrypting data.

New business software companies rent data storage and software via the cloud. It is a lower-margin business that can grow quickly, challenging the incumbents, and it is gradually winning market share.

As of today, at least 72% of businesses have adopted the cloud. Within 3 years, that number will reach a staggering 91% of businesses. Apple, one of the most consistently cutting edge technology companies, has also turned to cloud computing to manage Siri. Siri is a program that mimics a person’s listening ability and offers answers to user’s questions. The magic happens in the cloud where the questions are sent and processed before Siri answers the user’s question. The cloud’s size has allowed Apple to expand and adapt Siri over time without adding a financial burden on customers.

 

Making the Switch

But it’s not just the digital companies taking on the cloud: Xerox has also made the move to the cloud. It might come as a surprise to see a company who’s name is synonymous with paper photocopy utilizing such a new technology, but Xerox is utilizing the cloud to bring new capabilities to their clients. Xerox offers Cloud Print solution, which allows access to printers from wherever, as well as its own cloud service catered towards businesses.

The US General Services administration has moved their order management system to IBM SmartCloud for government. Intelligent automation of inventory management for the federal government is transforming the supply chain. The initiative features softwares and services hosted on the cloud to help their business process more quickly and respond to shifting customer demands. This use of the cloud will help the US general services administration adapt more quickly to today’s digitally transformed marketplace.

 The Winners and the Losers

It is evident that cloud storage is becoming core to all businesses, and like anything else in the burgeoning tech industry, the competition is fierce for cloud services. Many businesses are pivoting themselves to keep up with the prices that the likes of Amazon and Google have undercut. As larger companies enter the space of data management and hosting, storage will be increasingly scalable, and savings will ultimately be passed on to the consumer. Smaller hosting companies like Box and Dropbox may be acquired by the larger firms or become obsolete. But for businesses investing in storage, the outcome will be beneficial: savings on infrastructure and human capital with more opportunity for investment.

There may be a time when Google offers industry-specific services and storage offered at optimized rates. However, while the battle is still being waged, we can expect cloud services to move beyond apps and devices. Properly securing and managing the data, accurately and actively pursuing the latest trends of big data analysis and collaboration while offering consumer-centric solutions will determine the true winner.