Predictions 2025: Clouds Shift From Riches to RAGs

Integrated RAG services will become the hottest new cloud services. In the past year, cloud players sought differentiation through AI infrastructure and foundation models. But FMs bring their own issues, including hallucinations and accuracy concerns. In 2025, we predict that cloud players will shift their focus to retrieval-augmented generation (RAG) services as a form of differentiation. In fact, in the year ahead, every major hyperscaler will launch RAG-related solutions to build accuracy into their generative AI services.

Private cloud will gain momentum with VMware alternatives. On-premises computing (by any name) is on the rise again as companies solve sovereignty, cost, and data ownership/security challenges, but newcomers and private cloud expanders likely won't look to expand business with dominant private cloud player VMware given the bundling and pricing changes announced in the first half of 2024. As a result, Forrester predicts that in 2025 most major public cloud providers will increase investments in private cloud, and offerings like Nutanix and open-source projects like OpenStack will see increased user interest.

Platform specialists will squeeze out native cloud platforms' security capabilities. Vendors such as Cisco, Fortinet, Palo Alto Networks, and Wiz have made significant investment into their cloud security solutions with cloud security posture management, cloud infrastructure entitlement management, infrastructure-as-code scanning, and container security functionality sets, as well as centralized and generative AI-supported policy management, detection, response, and reporting. In 2025, hyperscalers such as AWS, Azure, and Google will continue to build their native cloud workload security (CWS) capabilities, but the competition from standalone solutions will be a formidable threat. By the end of 2025, 60% or fewer cloud customers will prefer the hyperscaler platform's native CWS capabilities, while the remaining 40% will use a platform specialist CWS vendor.