What do Virtualization and Cloud executives think about 2011?  Find out in this VMblog.com series exclusive.

It is a generally accepted opinion that the Cloud opportunity is exploding, changing the landscape of information technology (IT). As we start to wind down 2010 and think about 2011, here are three critical Cloudy areas that are going to be worth watching, and I also include one dark horse prediction to be a little provocative:

1) Look for a greater depth and breadth of providers entering the arena, particularly from CSPs and the IT Channel
So far, Cloud services providers have largely been a) web hosters that have evolved their offerings to be more elastic or b) a few Internet giants like Amazon, Google, Microsoft, and Salesforce.com. Turn up the air conditioning in 2011, as the competition is about to heat up, primarily from two additional major forces in IT.

First, competition will come from Communications Service Providers (CSPs) which include telcos, cable companies, and wireless operators. We have already seen a few telcos move in this direction, including Verizon, BT, and Orange, and several leading cable companies like Comcast and Charter are bundling hosted Microsoft applications (Exchange, Sharepoint, OCS) into their business class offerings. However, this is the tip of the iceberg. Virtually all CSPs are formulating a cloud strategy as I type this and plan on executing in 2011.

Second, the traditional IT channel - VARs and Distributors - have been revving up their Cloud engines as well. We have already seen some progressive stuff from Ingram Micro's Seismic, and a project from Tech Data in Belgium involving Parallels Automation, but the conversation is really heating up and the strategic planning among the largest VARs and Distributions is well under way. The IT channel now realizes just how disruptive the Cloud model is to their business and are being forced to evolve or face significant disintermediation and risk.

When it's all said and done, we are moving from a world of fairly clear lines of IT demarcation to a royal rumble of cloud, as shown in the illustration below: 

2) Cloud comes into focus for Small Businesses
Most of the conversation around Cloud up till now has focused on the opportunities in the Enterprise, and to some degree the Public sector. These represent very large deals and also involve a degree of complexity around security and data portability that are not trivial issues. While this effort will certainly continue in 2011, I expect to see a much greater focus on the opportunity to delivery Cloud services into small businesses. I am just starting to see this shift in focus from the likes of Microsoft and Cisco and it's only natural: small businesses do not have IT departments and can benefit greatly from easy to use, pay as you go Cloud services. Look for this conversation to really pick up in 2011.

3) Syndication for Cloud Services
While many of us may think of syndication as it applies to radio or TV shows, it will soon have a meaningful connotation when it comes to the Cloud as well. Simply put, a syndicated cloud service means that you offer and bill your customers for this service but a third party manages the actual infrastructure behind the service. This is an important strategic approach to offering cloud services because it enables you to offer a broader portfolio of services without the administrative burden of managing each individual application infrastructure. The downside would be that your margins will likely not be as high compared to services you fully manage, but then again, your Opex costs will be lower as well. Here is a conceptual framework of the value chain: 

Probably the best example of Cloud syndication at the moment is the opportunity for service providers to syndicate Microsoft’s Business Productivity Online Suite (BPOS) through Parallels Automation. This gives providers the ability to offer hosted Exchange, Sharepoint, Dynamics, and OCS without managing the actual infrastructure. Other syndicated Cloud services worth noting include Google’s Postini, Symantec’s Message Labs, and McAfee’s MXLogic. Look to Cloud syndication 2011 as a means for providers to rapidly broaden their Cloud services catalog.

4) The Dark Horse - All you can eat cloud
Now for a dark horse prediction: the pay-as-you-go billing model that has captivated the hearts and minds of Cloud watchers will shift to an all-you-can-eat model. The reason is simple: history repeats itself. We used to pay for long distance phone calls by the minute, in what is a perfectly reasonable pay-as-you-go model. However, demand has shifted and most telecom providers offer consumers an all-you-can-eat plan for unlimited long distance. While there are no doubt some cost issues to model out and mitigate against as a Cloud provider, I wouldn’t be surprised to see an all-you-can-eat Cloud model introduce itself in 2011.

About the Author

Josh Beil is the Director of Market Strategy and Research for Parallels, the leading provider of automation and virtualization software to the web hosting community.

Previously, Josh was the Director of Social Media & Technology at a Level 3 Communications [Nasdaq: LVLT] where he provided strategic and tactical sales support. Before that, Josh was CEO and cofounder of Skywave Broadband, Inc, the largest commercial WiFi service provider in Hawaii. He was named one of Pacific Business News' Forty Under 40 for 2006, and in 2005, he was named a High Tech Leader by the Pacific Technology Foundation. Before co-founding Skywave, Mr. Beil was VP of Research and Development for the market research boutique, Tier 1 Research, where he covered the Internet infrastructure sector as an analyst, and negotiated and sold subscriptions to Tier 1's research services. Josh has also previously served as the Senior Analyst for Exodus Communications as well as the internationally known market research firm, IDC. He holds a Certificate in E-Business from UCSC Extension, and he graduated with honors from the University of California at Santa Cruz with a major in Psychology.