How your business benefits from the cloud – even if you don’t use it

“The cloud” is one of the big buzzwords in the computer industry these days.

According to the latest Sensis Business Index, one in five businesses reported that they backed up their records using the cloud.

At its simplest, all it really means is “your data is on someone else’s server and you access it over the internet”.

If you have a Gmail or Hotmail account, you already have some of your data “in the cloud” – possibly without realising it. After all, your emails are on Google or Microsoft’s servers, not your own.

Likewise, videos on YouTube, websites hosted by a web hosting company and Dropbox accounts are all examples of using a cloud service.

For many small businesses, the big advantage of using a cloud service is that it avoids many of the headaches of running your own server. Security patches, maintenance, updates, cybersecurity scares and other issues are taken care of by someone else. The servers with your data are in their data centre, not yours.

Amid the growing hype about cloud-based services, it came as little surprise last week when IDC released figures showing a 3.7% year-on-year fall in revenues from server sales worldwide.

It would be easy to assume that the revenue crunch came because businesses are choosing to use cloud services instead of deploying their own servers. Perhaps it’s the back-end equivalent of consumers moving tasks from desktop PCs to smartphones and tablets?

However, a second set of numbers, this time from Gartner, shows the number of servers shipped worldwide actually increased by 1.9% between third quarter of 2012 to the same quarter this year.

At first glance, the two sets of figures seem quite contradictory. Why would revenues from servers fall while sales volumes rise?

The answer is competition.

All of those cloud service providers need large numbers of servers to store all their data. The data centres run by the likes of Google, Microsoft or Amazon are truly massive.

By IDC’s estimates, somewhere between 25% and 30% of the servers shipped next year will be purchased by cloud service providers, with the percentage likely to climb to just under half (45%) by 2017.

At the same time, those cloud services directly compete against server manufacturers, forcing them to control or reduce costs.

In effect, cloud computing providers are pushing server volumes up at the same time as they’re pushing the price of those servers down.

What this means is that even if your business chooses to run its own servers, rather than relying on IT services from a cloud provider, your business is still benefiting from the increased competition every time you upgrade your servers.

The bottom line is your business is almost certainly benefiting from the cloud – even if you don’t use it.