With the long-awaited IPO of cloud storage company Box now a bona fide success, what’s next for the hot cloud computing industry?
We talked to early Box investor Byron Deeter, a partner at Bessemer Venture Partners who created BVP’s index of public cloud companies. Since creating that index in 2013, the market cap of public cloud companies has grown from $US100 billion to $US165 billion, and there are now 25 cloud companies with valuations over $US1 billion.
So cloud computing is no long “coming” but definitely here and creating the next set of ginormous companies.
So what does Deeter predict will happen next to this hot enterprise market:
1. More huge acquisitions — look out for Adobe in particular. All VCs hope that some of their startups will be acquired for a big fat sum. So it’s no surprise that Deeter would make this prediction.
Still he thinks 2015 will be a banner year for cloud acquisiitons because there are now so many mid-sized startups making real money, and offering alternatives to classic software.
“Legacy vendors don’t have options,” he says.
We’ve already seen companies like SAP and Oracle become instant cloud players through acquisitions.
Deeter thinks Adobe’s is really the one to watch. “Adobe is the sleeper that has been pretty good at M&A in cloud and most outsiders don’t realise it,” he tells us.
He may have a point. Just this week, Adobe completed its acquisition of photo image company Fotolia and in September it bought Aviary, a developer of mobile software development kits. Adobe has also embraced the cloud in a big way, moving most of its core software to the cloud and charging for it as a subscription starting in May 2013. Since it made this move, Adobe’s stock has gone up more than 50%.
2. The “B2D” market: Mobile has always been a driving force behind cloud computing — files and apps aren’t stored on the device — and cloud companies that cater to enterprise developers are becoming an increasingly hot commodity. Box and New Relic have already had successful IPOs. Eyes are watching DocuSign and Evernote too. Deeter calls it the business-to-developer or “B2D” market, with the developer being a programmer that works for an enterprise.
3. Enterprise mobile apps that don’t really run on a desktop at all. All that talk about “mobile first” we’ve heard for years has mostly been for consumer apps. You don’t Tinder on your PC, for instance.
But there will increasingly be mobile-only (tablet and smartphone) apps for business use, particularly “field services, sales, services oriented businesses where remote access is becoming mission critical to businesses,” Deeter says.
IBM’s partnership with Apple for iPads/iOS apps is a good example, which has already produced a bunch of new apps.