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In public cloud computing fight, the gloves come off

Bernard Golden | April 11, 2014
Price cuts from Amazon, Google and Microsoft support predictions that the public cloud computing market is a race to the bottom -- for pricing, that is. Customers will no doubt benefit, but cloud providers who aren't one of those three companies should be prepared for a long, hard war of attrition.

2. If you hope to be one of IDC's six to eight dominant providers, recognize that this is a scale and investment market. You're need to be willing to invest billions to build out worldwide capability. Being a major player in this market isn't for the faint-hearted or the shallow-pocketed. Three companies have announced their intention to compete, and it remains to be seen if other large technology providers have the appetite to stay in the game. In this regard, Cisco's billion-dollar investment in creating its own public cloud offering should be seen as an ante up to enter that game, not the totality of investment required to win.

3.Understand that providing the full menu of services and ecosystem requires a real software expertise to develop services beyond basic Infrastructure as a Service and manage them at scale. There's no way to drop a basic orchestration product into a data center and compete with the market leaders. Expect a mad dash by providers to develop or acquire enough expertise to build out the software infrastructure required to compete at this level.

4.If the prospect of a low-price cloud provider business is unappealing, recognize that you need to offer something differentiated and valuable in order to boost margins and profitability. It won't be enough to assert, "We understand the enterprise." It will require true domain expertise, such as understanding a given industry's operations or compliance requirements, in order to offer customers value beyond that available from a low-cost provider. This approach is attractive, but it requires a strategic intent to acquire knowledge and talent focused on value-adding offerings. This won't necessarily be cheap, but it will require far less investment than that needed to operate a globally-scaled offering.

As Cloud Service Providers Go to War, You Reap Benefits
The announcements of the past two weeks show just how serious Amazon, Google, and Microsoft are about cloud computing and how much they want to win. To my mind, they should be seen not as tit-for-tat one-upmanship but, instead, as the easily foreseen implication of a high-stakes, high-cost contest played out by three of the most competitive technology companies around.

If you're a user, prepare to enjoy the fruits of this contest. If you're an existing technology vendor or a postulant competitor to these three companies, evaluate your strategy, gird your loins and prepare for an all-out war that will dictate your future.

 

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