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Tough times ahead for smaller cloud players in Asia

Anuradha Shukla | April 17, 2014
IDC predicts more competition due to slashing of prices by major Cloud Service Providers (CSPs) in the region.

IDC predicts tough times ahead for smaller cloud players in Asia as major vendors in the region dropped their prices for core services.

This slashing of prices will make it difficult for small CSPs to sustain in Asia and they have to do something different to gain a competitive edge.

Delivering basic and undifferentiated services on the same old pattern will not work in the favour of these smaller providers who may be acquired by larger providers, according to Chris Morris, AVP, Services Asia Pacific, and lead analyst, Cloud Services & Technologies, IDC Asia/Pacific.

"If the smaller CSPs are strong enough with decent customer bases, they will be acquired by larger providers. If not, then they're road-kill. In any case, both of the above will drive consolidation amongst the cloud vendors," said Morris.

InterCloud partnerships

Cisco recently made several InterCloud partnerships with major SPs and these alliances are based on differentiated Infrastructure-as-a-Service (IaaS).The company is providing an efficient network service that is cost effective and flexible in terms of reacting to different workload demands.

Cisco will leverage this partnership to design cloud services for different industries, including transportation and manufacturing.

Morris adds that most service providers including AWS, Google, Microsoft, Cisco, Oracle and HP want to have the same partners and this can lead to a scenario where partners are confused about selecting these providers.

He suggests cloud providers should use business-oriented apps if they want to generate sales volumes to maintain economies of scale.

"These apps will drive consumption of the basic, low-margin services and trigger growth in adjacent markets."

 

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