Fast forward a couple of years and the mention of the word “cloud” will no longer draw up the vision of an actual cloud, the sky, or anything even remotely related to the weather. Rather, it will, in all probability, denote storage technology and even the name of the company dominating the cloud market at that time.

Cloud Computing Deciphered

To begin with, there is absolutely nothing fluffy about cloud computing technology!

Initially used in telephony schematics to hide irrelevant details, the cloud symbol now represents the Internet in computing diagrams. The fundamental notion of cloud computing dates as far back as 1950, but it was in 2006 that the term was popularized by Amazon.com (AMZN – Analyst Report).

Basically, cloud computing is a procedure for storing data and software at a location outside the computer that can be easily accessed from anywhere and at any time via the Internet. This process is gaining traction as it can significantly cut IT costs for companies by removing expensive servers and trimming maintenance staff.

Simple enough, right?

Cloud’s Incredible Growth

Given its scope and advantages (cost, scaling, convenience, etc) it’s not surprising that the demand for cloud computing software and applications is on the rise. Cloud vendors usually offer the infrastructure and the related technology as a service, which further reduces the costs for adopters.

According to Centaur Partners, Software-as-a-Service (SaaS) and cloud-based business applications are likely to grow from $13.5 billion in 2013 to $32.8 billion in 2016, reflecting a compounded annual growth rate (CAGR) of 19.5%. Moreover, Computerworld forecasts that 42% of IT decision makers are planning to increase spending on cloud computing in 2015.

As mainstream adoption gathers steam, infrastructure will have to be built rapidly. It would therefore be more advantageous for the leading vendors to collaborate or even merge to capture a larger share of the pie — particularly since a number of niche players are entering the space with specialized capabilities.