Page 18 - ALCS Dubai

Supporting Notes

Worldwide figures annualised for comparison - source: analyst forecasts

• As comparison, explain growth rate in IT budgets generally is circa 2-3%, so Cloud represents a high growth opportunity.

• Nature of Cloud Services facilitates higher-level differentiation without the necessity for capital/skills investment – Eg. an
Independent Software Vendor could offer Software as-a-Service by running their application on (say) AWS thereby
avoiding need for capital investment in Data Centre and skills investment in Service Management.

• Of course there is still the consumer’s expectation of service management especially at the Software as-a-
Service/Business Process as-a-Service layers – and who will provide that across the entire delivery chain (end-to-end)?

• The callout: until recently (Apr15) there was a suspicion that Infrastructure as-a-Service providers were running at a
loss. But then AWS announced run-rate revenues of circa $6bn/year at 17% margin (ie. $1bn profit/year). To put that in
perspective, that is a similar size of business to VMware, but last at 3 points higher margin (so 17% more profitable).
VMware figures also annualised over TTM (trailing twelve months).