Cloud Computing Gaining Channel Traction

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Slightly less than half of solution providers primarily identify themselves as “cloud providers.” While it appears cloud computing is gaining traction in the channel, signs are pointing to a greatly fragmented landscape.

Slightly less than one-half -- 46 percent -- of solution providers now primarily identify themselves as cloud companies, up significantly over the previous year. The potential problem: The landscape of cloud provider types in the channel is greatly fragmented.

The year 2013 saw huge increases in solution providers identifying themselves as cloud companies. The number of companies calling themselves “SaaS resellers or providers” jumped 266 percent; the number of infrastructure and hosting providers leaped 350 percent; and the number of platform providers skyrocketed 800 percent.

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Problematic is the profitability of cloud computing services delivered or supported by solution providers is falling. In 2013, according to research by The 2112 Group, one-third of solution providers earned less than 5 percent gross margin on cloud products, and relatively few earned more than 30 percent profit on cloud sales.

CLICK HERE to take our State of the Cloud Channel SURVEY

By comparison, a majority of solution providers -- 60 percent -- identify themselves as value-added resellers or systems integrators, up 361 percent over 2012. Managed services providers remain a strong force in the channel, but not nearly as significant; their ranks have thinned by 23 percent over the previous year.

While the standard labels for solution providers remain dominant, their margins on product and services sales remain no better than any of the cloud services.

The rising popularity of cloud computing in the channel is encouraging, but more information is needed to understand and validate the trends. The 2112 Group and Channel Partners magazine are conducting our annual State of the Cloud Channel study. We need your help. Please take a few minutes today to complete our survey.

CLICK HERE to take our State of the Cloud Channel SURVEY

The information you provide will help us provide you with actionable guidance on how well cloud computing is doing today and what companies like yours need to do to succeed down the road.

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