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Over the next few years, we will learn whether cloud computing is a nice little business that will settle into maturity by the end of the decade or a once-in-a-generation business opportunity.

That’s the view of Morgan Stanley’s Brian Nowak, who delivered the Wall Street view of Cloud City earlier this month at our Cloud Tech Summit. There’s no question right now that cloud computing “is at a point of inflection,” he said, with very strong growth expected over the short term as more and more workloads move into the cloud.

Right now, Morgan Stanley estimates that about 20 percent of all workloads run on the cloud. “That 20 percent is a very important number because if you look at other adoption cycles, whether it’s notebooks, smartphone penetration, the x86 server, even digital music and video games, when you get to that 20 percent penetration point, that curve inflects and growth accelerates,” Nowak said.

That shouldn’t come as a surprise to anyone who has noticed the surge in Amazon Web Services revenue over the last few years. The real question is whether or not growth continues to accelerate this pace once public cloud hits the 50 percent penetration mark, which Morgan Stanley expects to happen around 2020.

“Historically, when you look at other markets, like in server virtualization, after that, growth in the market slowed considerably, down to the single digits,” Nowak said. Just to be safe, Morgan Stanley is making that projection to its clients, given the historical trends.

However, he acknowledged a bullish case for the cloud based around the fact that a lot of cloud workloads are brand-new workloads; instead of “lifting and shifting,” the industry jargon for taking applications running on homegrown infrastructure and moving them into the cloud, lots of companies are starting new workloads on cloud services.

As those workloads scale, that’s a ton of new business for cloud providers that simply didn’t exist on on-premises hardware. And, of course, there are still lots of companies moving those older workloads onto the cloud as well, giving cloud companies several sources of growth over the next few years.

Another trend to watch is the growth of hybrid cloud strategies, with workloads spread across the public cloud and internal servers, which might put a damper on the most bullish case for public cloud but still mean companies are increasing what they spend in the cloud.

Watch the full video of Nowak’s talk above, and stay tuned for more highlights from the event in the days ahead.

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