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Up-and-comers pushing cloud stalwarts to diversify

Brandon Butler | Jan. 25, 2013
Leading cloud computing vendors are diversifying into new product and service areas, as well as expanding into new geographic territories in an effort to stave off up-and-comers, according to new research.

These moves put Salesforce in a strong position, TBR believes, but it does create some new challenges. Most notably, it means the company is now competing against some companies it used to consider partners. Its HR platform competes with WorkDay, a former partner. SalesForce ChatterBox, a collaboration tool, is competing with Box, another one-time partner.

"For SalesForce and other public cloud pure plays, this maturation ... is grounded in the strategy that you can't be reliant on one offering for too long," says Allan Krans, another TBR analyst. Salesforce's ability to cross-sell these new platforms into its existing customer base makes the company a formidable player in the market though.

Amazon has made a similar transition with its Web Services division. Expanding outside of the company's core virtual machine (Elastic Cloud Compute or EC2) and storage (Simple Storage Service or S3) offerings, AWS has stretched into database management, software hosting and PaaS, with its Elastic BeanStalk tools. These offerings represent additional points of entry into developers and enterprises.

Amazon has been forced to expand into these new areas because of the rapid onslaught of competitors trying to knock the company from its market leading Infrastructure as a Service (IaaS) position, TBR suggests. Companies like Joyent, GoGrid, Terremark, Rackspace and others are all contenders.

Each of those vendors is attempting to stake out its own niche. Verizon, through its Terremark cloud division, for example, has begun to market to specific vertical niches, creating a cloud offering that is compliant with the healthcare industry's HIPAA regulations, and the federal government's FISMA mandates. HP and Dell are attempting to make similar moves to grab market share through specific vertical industries, with HP targeting airline and communications providers and Dell turning to retailers.

It's not just new products and services that companies are using to expand their market reach - they're also going global. Many cloud providers focused their initial push in the United States and Western Europe, but during the past 12 to 18 months there's been a significant ramp-up of investments by cloud providers looking to emerging markets. Verizon has built new data centers in Brazil. IBM has announced a $70 million investment in Mexico, including a new data center. ServiceNow, an IaaS provider, has announced expansion plans into Asia and Latin America following its IPO. HP and Fujitsu have also turned to international locales.

Combined, the moves represent the new lengths that providers are going to in order to differentiate their offerings and either hold their market share, or attempt to steal business from the leading providers.


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