It's been a strange and difficult time as the world struggles with the societal, health, and economic impact of the COVID-19 pandemic. But a funny thing happened on the way to global chaos—cloud technologies players are benefiting from the trend and they stand to reap long-term gains as technology buyers see the advantages for their platforms.
Aside from obvious examples, such as videoconferencing leader Zoom Communications and cybersecurity firms such as Qualys and Okta, that are seeing growing enterprise demand driven by the work from home (WFH) trend, a wider range of cloud players are also seeing gains. This range includes cloud platforms such as Amazon, Microsoft Azure, and Google Cloud Platform (GCP), virtualization leaders Citrix and VMware, as well as software-defined wide-area networking (SD-WAN) network players and startups in cloud-native and multi-cloud infrastructure.
And the impact is already being seen in financial results.
Google shares recently vaulted back near all-time highs when it revealed that growth in GCP and YouTube was surging to offset a downturn in ad spending. Microsoft also announced spectacular cloud revenue growth, with Azure showing annual growth of 59%.
Rohit Kulkarni, executive director with MKM partners, pointed out recently in a research note that Google is benefitting from cloud trend in the COVID-19 crisis as virtual and cloud tools get more attention from government spending and the WFH trend.
"Pandemic has led to more usage across Google assets: We think Google is a direct beneficiary from more use cases opening up in sectors such as government and healthcare," wrote Kulkarni in a research note this week.
Focus on WFH solutions
Tech companies are responding by adapting technology for a market that has quickly shifted a majority of the workforce to remote locations and WFH. Players in the cloud networking market have quickly moved to position their solutions for remote workers and cloud. Some of the SD-WAN players that have made COVID-19 related product announcements include Aryaka Networks, Colt Technology Services, Nuage Networks, and Versa Networks, among others.
Nuage Networks, for example, announced a partnership with Asavie to extend its SD-WAN and security offerings beyond the branch to remote workers, mobile devices and IoT. Aryaka Networks released new solutions targeted at remote workers. Colt recently upgraded SD-WAN with VoIP optimization and IPv6 support, added to target shifts in network demand related to the coronavirus pandemic as millions of enterprise employees now work from home. Versa Networks is preparing to roll out a new solution called Versa Secure Access targeted at WFH users and based on its SD-WAN and security technology.
Long-term shift to cloud native?
The question is: What does this mean for the long term? It’s clear that many of these trends will stick as many companies have found themselves unprepared for a surge in cloud demand and activity.
Recently I attended a video conference hosted by investment firm Cantor Fitzgerald in which Steve Mullaney, a long-time networking executive who is now CEO of Aviatrix, said that the COVD-19 will accelerate a long-term shift to cloud-native solutions. This will pose a major threat to legacy networking vendors such as Cisco and Juniper Networks.
"What I hear from enterprises is that it's [COVID-19] further accelerating the move to the cloud. When you have a recession, it further accelerates the cuts to your expenses and actually increases investments,” said Mullaney. “You take money away from expense areas and put it into investment areas."
Mullaney has described this new investment in cloud as a "transformation" rather than a "transition," whereby a transition is a short-term technology shift every few years, while a transformation is a bigger shift along the lines of the move from the mainframes to client/server in the late '80s or adoption of the internet in the 1990s. Aviatrix recently gained the University of Pennsylvania’s Wharton School as a customer. Wharton is using its multi-cloud networking software to orchestrate and manage the online influx of multi-cloud traffic.
A recent survey by the publication Inside Higher Ed shows that three-quarters of the 187 two- and four-year college presidents surveyed view access to online educational resources as a major concern driven by the crisis. And over 75% of them intend to invest more in online education after the pandemic.
Other executives of cloud infrastructure players I speak with agree. Kelly Ahuja, a former Cisco executive who is now CEO of Versa Networks, says the current crisis is sparking an investment in cloud networking technology – especially for remote working capabilities.
"Most people are saying, I have to rely on cloud infrastructure more because I can’t get into my data centers or head offices," Ahuja told me in a recent discussion. "Plus, they realize they need more elasticity and scale as needed. That’s on the cloud side. The shift to cloud and SaaS and multi-cloud, that’s going to get more prevalent."
Ahuja points out that the WFH trend has revealed that it’s difficult to secure, separate, and manage work traffic from home traffic in the remote location, and that IT managers need a better way to do that, including gaining visibility and control of a WFH user’s network.
“The home is now the branch,” says Ahuja.
It might be too early to say how much of the surge in demand for cloud, multi-cloud, and remote security will stick after the crisis subsides, but it’s clear that the markets are evolving rapidly to meet demand for cloud-hosted technology solutions. The reasons are clear: The flexible, agile, and scalable characteristics of cloud technology make it particularly suited for a crisis such as COVID-19. Enterprises and consumers are going to learn from this experience.
R. Scott Raynovich is the founder and chief analyst of Futuriom. For two decades, he has been covering a wide range of technology as an editor, analyst, and publisher. Most recently, he was VP of research at SDxCentral.com, which acquired his previous technology website, Rayno Report, in 2015. Prior to that, he was the editor in chief of Light Reading, where he worked for nine years. Raynovich has also served as investment editor at Red Herring, where he started the New York bureau and helped build the original Redherring.com website. He has won several industry awards, including an Editor & Publisher award for Best Business Blog, and his analysis has been featured by prominent media outlets including NPR, CNBC, The Wall Street Journal, and the San Jose Mercury News. He can be reached at [email protected]; follow him @rayno.
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceTelecom staff. They do not represent the opinions of FierceTelecom.