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Why is everyone moving to the cloud?

Why is everyone moving to the cloud?
2009-09-152013-02-11cloud & data centeren
Cloud, Cloud, Cloud... A new company seems to launch cloud computing offers every day. Is this over-hype or is there a business motivation for each of them to enter this new market. Let's consider each type of player and thier associated strategy.   - Some players were created...
Published September 15, 2009 by Alexandre Rigaldo in cloud & data center
Cloud, Cloud, Cloud... A new company seems to launch cloud computing offers every day. Is this over-hype or is there a business motivation for each of them to enter this new market. Let's consider each type of player and thier associated strategy.
 
- Some players were created specifically to fit this market (Enomaly, Stera, OpSource...). Here their whole business case is based on cloud computing, 100% of their revenues and 100% of their costs. No doubt about their real motivation, obviously.
 
 
- Amazon has a very non-typical model as they have leveraged their internal IT infrastructure to transform it into a capacity offering for other companies to use it. We all know this is very successful, but given the small revenue it generates compared to their core business, who can claim this is here to stay? By the way, anyone knows any other company who may have adopted the same strategy?
 
- Regional hosting companies (Savvis, Rackspace, Terremark...) brought evolutions to their standard offers so that they can benefit from the cloud. Cloud Computing allows them to target smaller companies and increase their revenues. We can expect that when cloud computing gets mature, this business will represent most of their incomes.
 
- Integrators such as Accenture or Atos Origin are leveraging their traditional "build" business into the "run" thanks to tailor-made cloud computing architectures. This provides them with more recurring revenue, thus secures their future.
 
- Most of the large Internet players (Yahoo, Google, Facebook...) have adopted cloud infrastructure as a better way to deliver their services. Most of their revenues being based on advertising, they need to attract more web surfers every day. Cloud Computing allows them to propose faster, more reliable and more responsive services, making sure the users are not deterred by delays or bugs. Cloud is a cornerstone of Web 2.0.
 
- Some IT distributors (Ingram, TechData...) are also climbing the value chain with cloud computing, an ideal way to increase their revenue, but also margins.
 
- IT manufacturers (IBM, HP, Cisco, EMC...) are all entering the cloud in one way or another. They want to make sure their products will equip the next cloud infrastructures, anticipating the expected evolution of IT into the cloud. Most of them even propose true cloud services, adding value to their offer, leveraging or bypassing current distributors. All have a feeling there is a place for them in this booming market and that the first come will be the first served.
 
- Software editors (SAP, Microsoft, Oracle...) are also turning their products into cloud-based services, finding a way to add new revenue streams, although at a lower margin. It is also a way for them to attack customers directly without using the traditional channels. Two main benefits to that: propose more agressive prices to gain market shares, and reinforce customer intimacy.
 
- So what about telcos? They have experience in providing a large infrastructure into many customers in real-time with usage-based billing (that is to say telephone).
Most of them have a tremendous opportunity to play a unique role by proposing end-to-end services over the network, but only a few are leveraging this asset for the moment. Most of the offers concern end-point Infrastructure-as-a-Service. But it is likely that their forthcoming offer will shake the market...

1 Comment

  • October 5, 2009
    2009-10-05
    by
    JF Fava-Verde
    "Amazon ... We all know this is very successful, but given the small revenue it generates compared to their core business, who can claim this is here to stay?"

    Let's bring Amazon Web Services into perspective: yes, it represents only about 3% of their overall business - but 3% of about $20 billion is a sizable chunk of money... It has been estimated that EC2 alone generates currently $220 million annually, growing at 10% monthly. So, with about 40,000 servers and key partnerships like the one with Capgemini we can expect AWS to have a significant impact in the enterprise market in the years to come.

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