Cloud Computing may lead to the Downfall of Traditional Hardware and Software

April 25, 2013

Cloud computing has become nearly omnipresent in American businesses – IT managers have steered away from traditional software solutions for running their operations and moved toward storing their data online, using channels that are easily accessible to remote workers and mobile users in addition to in-house employees.

For companies themselves, the cloud is a godsend, as it's brought about marked improvements in productivity and profit. For the cloud vendors, the growing trend has been a tremendous boon financially – their sales have soared as their products grow in popularity. But there's one faction being left behind by the cloud boom that's come about in recent years – the old guard of computing. As the cloud has risen, makers of traditional hardware and software have been rendered obsolete. For some, that's been devastating to business.

Baird Equity Research Technology recently published a report referring to cloud expansion as the driving force behind "a shrinking IT spending pie." The problem, the firm explained, is that not all IT projects are created equal, fiscally speaking – completing an IT initiative might have cost a certain amount using conventional software solutions in the past, but it costs far less now using the cloud. The changing tech landscape is not zero-sum game – the industry at large is losing revenue.

"We estimate that for every dollar spent on [Amazon Web Services], there is at least $3 to $4 not spent on traditional IT," the Baird report said, according to InfoWorld. "This ratio will likely expand further. In other words, AWS reaching $10 billion in revenues by 2016 translates into at least $30 to $40 billion lost from the traditional IT market."

IT terminology is being redefined
This transition away from traditional software isn't a bad thing, but it may take some getting used to. According to Jeremy Roberts, an IT professional who provides consulting for technology acquisition, the cloud revolution is changing the way we define our basic IT terminology. In the past, there was a strict delineation between an "application" and a "web site" – in the new cloud-based tech landscape, that border has become blurry.

Previously, it was a long, multi-step process for users to determine whether a software application was the right fit for them. People would need to find applications either in stores or with private vendors, determine if they met system requirements, purchase them, install them, license them and sometimes even configure hardware to go with them.

That whole process has changed. The cloud is taking over, and the old methods of adopting software solutions may never be seen again.