Cloud Computing Could Cut Data Center Energy Consumption by Nearly One-Third by 2020

September 20, 2011

Though the inner workings of the global communications network are so complex that they remain opaque even to those who operate it, the redundancy and fail-over capabilities of the system have made it so reliable that the internet-based cloud has become a trusted place to store and transmit critical data.  The rapid spread of cloud computing has enabled enterprises to outsource many information technology capabilities, including and especially data centers, leading to savings on manpower, money, and energy.  According to a recent report from Pike Research, the energy-efficiency benefits of cloud computing are substantial, and growth in the market will have important implications for both energy consumption and greenhouse gas (GHG) emissions.  The cleantech market intelligence firm forecasts that the continued adoption of cloud computing will lead to a reduction of data center energy consumption of 31% from 2010 to 2020.

“Cloud computing revenue will grow strongly over the next decade, with a CAGR of almost 29%,” says senior analyst Eric Woods.  “But the reduction in energy consumption will be even more significant.  Massive investments in new data center technologies and computing clouds are leading to unprecedented efficiencies.”

Simply put, clouds are less expensive to operate, consume less energy, and have higher utilization rates than traditional data centers.  As a result, the transition to the cloud will continue to accelerate, and much of the work done today in internal data centers will be outsourced to the cloud by the end of the decade.

Furthermore, it’s important to note that the spread of cloud computing services is helping to create a virtuous circle, wherein suppliers of servers, network equipment, disk drives, and cooling and power equipment increasingly design their products to suit the needs of large cloud operators, leading to improved operating margins through better use of electricity, and in turn to more adoption.  Many of the products designed specifically to optimize cloud computing have only recently begun to reach the market.

Pike Research’s report, “Cloud Computing Energy Efficiency”, provides an in-depth analysis of the energy efficiency benefits of cloud computing, including an assessment of the software as a service (SaaS), platform as a service (PaaS), and infrastructure as a service (IaaS) markets.  The study examines the key demand drivers and technical developments related to cloud computing, in addition to providing detailed profiles of key industry players.  Market forecasts include a quantification of energy savings and GHG reduction opportunities under a cloud computing adoption scenario, with a forecast period extending through 2020.  An Executive Summary of the report is available for free download on the firm’s website.

Pike Research is a market research and consulting firm that provides in-depth analysis of global clean technology markets.  The company’s research methodology combines supply-side industry analysis, end-user primary research and demand assessment, and deep examination of technology trends to provide a comprehensive view of the Smart Energy, Smart Grid, Smart Transportation, Smart Industry, and Smart Buildings sectors.  For more information, visit www.navigantresearch.com or call +1.303.997.7609.

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