SCOTTSDALE, AZ — Cloud computing, once more hype than reality, now offers very real solutions to very real business problems. SOHO and small businesses are seriously looking to public cloud computing services as the main solution to a variety of IT needs, according to research firm In-Stat.

“Web hosting and data storage are the most obvious IT needs that can be addressed by public cloud services, such as Amazon Web Services’ S3 and EC2,” says Greg Potter, research analyst. “With the advent of SaaS (software as a service) offerings such as Google Docs,, and Microsoft Live, many businesses are realizing that much of their IT needs can be fulfilled without the need for expensive networking equipment and high-end computers.”

Recognizing that the cloud can replace the need for increased processing power, many small businesses are revisiting the idea of using thin clients for most of their employees. Spurring this transition is the introduction of Google’s Chrome OS, which was developed for always-connected devices, and the announcements by computer companies, such as Acer, of devices that will use Chrome OS. Even if Chrome OS does not work particularly well for businesses, In-Stat says, it shows that virtualization of a more traditional Windows or Linux office environment could be easily accomplished.

Opportunities for Cloud Service Providers
There are opportunities for a variety of cloud service providers to serve the SOHO and small-business markets. Small-business spending on public cloud services in 2010 will be roughly $3 billion, and public cloud computing revenues are set to increase well over 100 percent from 2010 to 2014. This increase is changing the IT infrastructure paradigm in SOHO (1-4 employees) and small (5-99 employees) businesses. In-Stat’s research indicates that SOHO and small businesses will comprise roughly 65 percent of the public cloud computing market in 2014.

Mid-sized (100-999 employees) and enterprise (1,000 and more employees) businesses have other issues to consider — primarily security and the cost of transition — when evaluating their choices for cloud computing solutions. Unlike smaller companies, they can choose between public and private clouds. Private clouds give businesses that are securing sensitive data an alternative to the public cloud, allowing them to realize cost advantages and improved utilization of IT equipment over a traditional physical infrastructure deployment.

Many enterprises are already running virtualization software such as Citrix or VMWare on their current infrastructure. For these companies, moving to a public or even hybrid cloud option may make neither business nor economic sense. For those companies not already utilizing a private cloud, the public cloud offers an appealing demand-based payment model and scalable infrastructure. In the end, In-Stat concludes that most large companies will choose the hybrid cloud approach, moving mission-critical information and applications to a private cloud and partnering with prominent public cloud infrastructure providers for noncritical services and Web hosting.