Strategic Analysis of Australian Infrastructure as a Service (IaaS) Market

Arun ChandrasekaranResearch DirectorICT Practice

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Market Definition

Infrastructure as a Service (IaaS) is a provision model in which an organization outsources the hardware used to support business operations. The service provider owns the equipment and is responsible for housing, running and maintaining it with the client typically paying on a per-use basis.

Source: Frost & Sullivan

Infrastructure as a Service

Computing Storage

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Market Definition (Cont’d.)

Services delivered over

the public network

Pay as you use model –

Typically hourly rates for

compute and $/GB for Storage

No long-term contract

requirements

Multi-tenant Infrastructure

Key Features of IaaS

Source: Frost & Sullivan

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Market Overview

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Infrastructure as a Service Market Highlights

Measurement Name Measurement Trend

Market age Growth Increasing

Revenues (2010) US$27.5 million Increasing

Potential revenues (2017) US$466.5 million Increasing

Compound annual growth rate (2010-2017) 49.8% -

Price sensitivity Medium Increasing

Competitors (active market competitors in base year) More than 10 Increasing

IaaS Market: Market Engineering Measurements (Australia)

Note: All figures are rounded; the base year is 2010. Source: Frost & Sullivan

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Market Drivers / Restraints

Rank Drivers Impact

1 Shift from a CapEx to OpEx model – predictable monthly expenditure High

2 Rapid deployment – Agility High

3 Ease of use – web-enabled self provisioning model High

4 Eliminates time and resources dedicated to infrastructure maintenance and management Medium

5 Scalability allows enterprises to match infrastructure with dynamic business requirements Medium

6 Low barriers to entry and the lack of long term commitments Medium

IaaS Market: Market Drivers Ranked in Order of Impact (Australia), 2011-2017

Source: Frost & Sullivan

IaaS Market: Market Restraints Ranked in Order of Impact (Asia Pacific), 2011-2017

Rank Restraints Impact

1 Privacy and security concerns High

2 Inability to track location of data in the Cloud High

3 Data Handling issues – Migration, Recovery, Archival Medium

4 High latency and reliability issues Medium

Source: Frost & Sullivan

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IaaS Use Cases

Evolving IaaSUse Cases

Test and development environments

Managed hosting customers switching to IaaS

Cloudbursting for production environments

BCP/DR in Cloud (Storage)

Computationally intensive tasks that demand high scalability

Storage for Archiving / Compliance

Mobile app developersRich media storage for access to internet / public users

Start-up businesses looking for agile and scalable infrastructure without CapEx

One-off projects (compute)

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Australia Market Trends

IaaS Market: Regional Highlights (Australia)

• Australia is the largest IaaS market in Asia Pacific and is significantly ahead of other markets on the maturity curve.

• The high level of adoption is attributable to the high broadband penetration and awareness levels among enterprises.

Mature Market

• Given that it is the largest and the most mature market in the region, it has witnessed the entry of major global market participants.

• Further, there is a large number of local participants that have introduced their services in the market. This is driving a high level of market awareness.

Developed Service Provider Landscape

• Despite Australia being one of the early adopters of IaaS, the government vertical has shown significantly lower traction vis-à-vis the others.

• This is primarily due to concerns around security, privacy and data location. Given that more and more local players are entering the market, this trend is expected to change in the future.

• The government has already outlined a draft strategy – Whole of Government Approach to the Cloud – towards Cloud adoption in the near future.

Government Adoption Continues

to be Low

• The implementation of NBN in Australia is expected to bring about the required network enhancements in the next decade

Lack of Comprehensive

Broadband Network

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For Additional Information

Donna JeremiahCorporate CommunicationsAsia Pacific+603 6204 5832djeremiah@frost.com

Carrie LowCorporate CommunicationsAsia Pacific+603 6204 5910carrie.low@frost.com

Arun ChandrasekaranResearch DirectorICTapacfrost@frost.com