In some respects, the cloud computing market arrived in a big way in 2008. Amazon, EMC/VMware, IBM, Google, Microsoft, Salesforce, and a dozen other vendors introduced products and services for on-demand, pay-as-you-go computing.

In other ways, however, cloud computing is still nascent. Google's "platform as a service" App Engine is only in preview mode, Microsoft's Azure Platform Services have yet to be delivered, and Oracle and SAP are watching and waiting from the sidelines. In addition, businesses adopting cloud services are still in the minority, as IT pros mull the security risks, governance implications, and data-integration challenges of this new IT delivery model.

What happens next? Despite the economic recession, new players will emerge as cloud service providers and, because of the recession, IT departments will plug into cloud services as a way of "doing more with less." Some of the issues associated with cloud computing will fade into the background, while others will be pushed to the forefront. Following are my predictions for what's ahead in 2009.

1. The Cloud Market Will Grow Steadily.

Cloud computing growth will exceed 20%. That number is an educated guess, not the result of market research, but the important point is that the cloud market will grow at a healthy rate -- 10%, 20%, 30%, or more -- while enterprise software, hardware, and other segments of the IT market are hard pressed to grow at all. In two recent examples, Amazon's nonretail business, which includes Amazon Web Services, grew 45% in the third quarter of 2008, while Salesforce's revenue in the third fiscal quarter climbed 43%. Cloud services will appeal to budget-restrained IT departments looking for ways to deliver new applications without investing in new software and servers.

2. Google Will Remain A Niche Player.

Google App Engine is an interesting new alternative for developers looking for ways to build and deploy Web applications, but it will appeal mainly to startups, Web 2.0 companies, and other small businesses. Typical of the companies using App Engine are BuddyPoke, which lets users create 3-D avatars, and Pixverse, a developer of Web chat and other social media apps. Google Docs (software as a service) and Google App Engine (platform as a service) may eventually gain popularity among larger companies, but for the foreseeable future they will remain disruptive-but-niche solutions in the enterprise.

3. Service Outages Will Be More Frequent, But Less Disruptive.

When Amazon's Simple Storage Service crashed for two hours in February 2008, then for eight hours in July, S3-based Web applications suffered related outages. As more companies sign up for cloud services in 2009, two things will happen. First, the added workload will cause more cloud failures like those experienced by Amazon. And second, cloud users will be better prepared. Having learned their lessons, IT pros will devise backup plans and recovery scenarios so that their applications don't fail when the cloud does. 4. Big Companies Will Embrace The Cloud.

Until now, cloud computing has been popular mostly among smaller companies, but corporations and other large user organizations will shed their inhibitions and adopt cloud services much more aggressively in 2009. Why? Because they can. Enterprise-class management tools, data-integration technologies, and other prerequisites are becoming increasingly available. The promise of cost savings and the ease of subscription-style pricing will also fuel adoption among larger companies.

5. Microsoft Will Keep Customers On Hold.

If 2008 was the year that Microsoft raised the curtain on its cloud computing strategy, 2009 will be the year that it begins to deliver on what it's promised -- but don't expect too much. Microsoft's Windows Azure cloud operating system and the related Windows Azure Platform Services are still in development, and Microsoft has been vague about when they will become available. We may begin to see some Azure services in the second half of 2009, but 2010 is a more realistic timeframe for general availability.

6. Enterprise-Class Management Tools Will Emerge.

It may seem like Amazon's Elastic Compute Cloud is the granddaddy of cloud services, but in fact EC2 only became generally available two months ago after a long test cycle. That's significant because much-needed EC2 management tools are due next. Amazon has promised EC2 management, monitoring, load-balancing, and auto scaling tools in early 2009. IBM's Tivoli division plans to add cloud management to its Tivoli Service Request Manager, Provisioning Manager, and Monitoring products. These are just a few examples; there will be more.

7. Cloud Startups Will Thrive.

In September 2008, InformationWeek introduced 20 cloud computing startups that are geared to make a big impact (registration required). In October, it added eight startups to that list. A few weeks ago, cloud management vendor RightScale announced that it had closed $13 million in second-round funding. Venture capital may be drying up around Silicon Valley, but cloud computing startups will be an exception. 8. We'll See Public-Private Clouds.

IT departments will create public-private hybrid clouds. They'll use virtualization, APIs, and platforms like Elastra's Cloud Server to devise cloud-like environments in their own data centers that work seamlessly with public cloud services. As I reported a few weeks ago, work is underway to create a "wrapper" around Google App Engine that would let users deploy App Engine on their own servers. Some experts talk of "private clouds" as an alternative to public clouds, but hybrid clouds mix the best of both worlds.

9. Data Security Will Reemerge As A Major Issue.

I keep hearing that IT pros are growing comfortable with the level of data security provided by cloud service providers, that cloud security is as good or better than what most IT departments provide internally. That may be true, but it will only take one data breach before the flaw in that argument gets exposed -- namely, that end users, regulators, and watchdog groups have yet to be convinced that the cloud is a secure place for personal data. Look for this issue to blow up as soon as the inevitable data breach occurs.

10. Oracle Will Become A Cloud Vendor.

Larry Ellison loves to bad mouth cloud computing, but Oracle's CEO is no dummy. Having watched Salesforce thrive with the software-as-a-service model, he now sees Salesforce and other vendors raise the stakes with platform-as-a-service offerings that give developers everything they need to build and run applications in the cloud. On top of that, Oracle's database is now available as an option on Amazon's EC2, and Oracle already offers hosted applications in the form of Oracle On Demand. The obvious next steps: virtual databases and build-it, run-it Web applications, hosted by Oracle.

The market is getting crowded with Web-based software and storage offerings. InformationWeek's Guide to Cloud Computing tells you what you need to know about the cloud computing strategies of Amazon, Google, Salesforce, and five other leading vendors, and Cloud Storage's Top Uses profiles five areas where new models pay off -- and three places where they don't (registration required).