John Treadway of Cloud Bzz asked my colleague Ben Pring, at our Outsourcing Summit, about how we derived our cloud forecast. Ben’s answer is apparently causing a bit of concern. I figured it might be useful for me to respond publicly, since I’m one of the authors of the forecast.

The full forecast document (clients only, sorry) contains a lot of different segments, which in turn make up the full market that we’ve termed “cloud computing”. We’ve forecasted each segment, along with subsegments within them. Those segments, and their subsegments, are Business Process Services (cloud-based advertising, e-commerce, HR, payments, and other); Applications (no subcategories; this is “cloud SaaS”); Application Infrastructure (platform and integration); and System Infrastructure (compute, storage, and backup).

Obviously, one argue whether or not it’s valid to include advertising revenue, but a key point that should not be missed is that in the trend towards the consumerization of IT, it is the advertiser that often implicitly pays for the consumer’s use of an IT service, rather than the consuer himself. Advertising revenue is a significant component of the overall market, part of the “cloud” phenomenon even if you don’t necessarily think of it as “computing”.

Because we offer highly granular breakouts within the forecast, those who are looking for specific details or who wish to classify the market in a particular way should be able to do so. If you want to define cloud computing as just typical notions of PaaS plus IaaS, for instance, you can probably simply take our platform, compute, and storage line-items and add them together.

Is it confusing to see the giant number with advertising included? It can be. I often start off descriptions of our forecast with, “This is a huge number, but you should note that a substantial percentage of these revenues are derived from online advertising.” and then drill down into a forecast for a particular segment or subsegment of audience interest.

Giant numbers can be splashily exciting on conference presentations, but pretty much anyone doing anything practical with the forecast (like trying to figure out their market opportunity) looks at a segment or even a subsegment.