Page last updated at 13:45 GMT, Monday, 26 April 2010 14:45 UK

Cloud computing to double by 2012

Cloud skies over city
Cloud computing is expanding rapidly

The UK will spend over £1 billion on cloud computing by 2012 - twice as much as today - researchers predict.

This would mean more consumers and businesses subscribing to web-based services, such as Google Apps.

Cloud-based services currently account for around 7.5% of the £8 billion UK software market, according to research company TechMarketView.

But others say cloud computing is hyped and will complement traditional desktop software rather than replace it.

"In the old days, big companies used to generate their own electricity. But they do not do that any more", said Philip Carnelley, senior analyst at TechMarketView.

"Software is going the same way - let others do the processing."

TechMarketView predicts cloud services will be worth around £1.2 billion per year in the UK by 2012.

"This is not just analysts hyping things up", says Philip Carnelley, a senior analyst at the company. "It is a genuine shift."

Cloud computing means that people do not have to invest in powerful computers and software to store their data.

Instead, they can outsource their needs to cloud companies, which charge subscription fees.

Hybrid evolution

But not everyone agrees that cloud computing will replace traditional software which processes data locally.

"The amount of cloud computing is quite small at the moment, so even if it does double that is not such a big deal", says analyst Laurent Lachal at rival research firm Ovum.

"The IT industry loves to concentrate on a topic for a few months and then turn against it. There will be a backlash by the end of the year."

Lachal does not dismiss cloud computing, but he thinks its limitations make it more of an add-on to software.

"It's becoming a hybrid system - for example you create your work on software on your PC, and then you save it and share it through the cloud."

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