Earlier this month I offered my thoughts on cloud commoditization. To recap, as cloud becomes more prevalent, basic cloud services will inevitably start to commoditize i.e. the basic offerings from each service provider will become more similar. As a result, prices and profit margins will reduce.
Only a few weeks later and Data Center Knowledge reports that “cloud pricing wars are on.” Our friends at RightScale say it is seeing aggressive price-cutting on the part of major cloud providers. RightScale says on its blog:
Over the last 14 months, we counted 29 price reductions in cloud services provided by AWS, Google Compute Engine, Windows Azure, and Rackspace Cloud.
The company points to competition as the factor in at least some of the price changes. The problem with this, though, is that price is becoming a point of differentiation, rather than value added cloud services.
Instead of joining the price wars with the enormous market giants, smaller cloud service providers need to understand ways to differentiate. Understanding the following seven points will help:
Gartner, Forrester, 451 Research Group, GigaOM, Info-Tech, Bain, and even Citi Group have all confirmed that consumption of cloud services is growing faster than every other aspect of IT spend.
Brian Garvey, Director of Distribution and Channels, and Jim Foley, SVP Market Development, will be discussing this highly relevant strategy in a webinar entitled:
Thursday 28th of March at 1:00 p.m. GMT / 9:00 a.m. EDT.
Amazon and Rackspace are securing large numbers of cloud services customers internationally because they entered the market quickly and at scale. If you are a smaller service provider unable to gain similar traction to these giants, how can you gain share in this exponentially expanding market?
It is imperative that businesses today get to market and establish their customer base quickly. Rather than making a large hardware and software and development investment for cloud management, companies should spend their funds more wisely investing in technology that can help differentiate against competition or focus investment heavily on sales and marketing. How exactly can they do this? An effective reseller strategy can be the answer.
This is not always easy. To ensure that your cloud services business is ready to use an effective reseller strategy, our webinar this Thursday will walk you through five critical strategic decisions you must make before executing a reseller strategy in your cloud services business.
One of the primary takeaways from WHD Global is the extent to which our market is interconnected. You talk to one customer who is connected to two other technology vendors that are in attendance and then discover that we are all providing services to a number of the same clients. This then throws up the logical question of why are we not working closer together. This pattern has repeated throughout the two days.
Why should this be the case?
One reason might be that in an emerging market the ‘whole solution’ is not likely to exist under any single vendor. Instead, individual vendors are specialist in specific functions. For Flexiant, it is cloud management, for others it might be monitoring and performance tuning or security and single sign on etc.
Of course every market matures towards the point where it demands a whole product solution. In the interim, partnering to ensure that the customer receives the capabilities required is critical to success. The buzz at WHD in the last two days has not only been created from meeting new potential clients, but also from progressing existing partnerships and identifying new potential partners.
The answer is a resounding yes. The market for cloud services is growing rapidly. But with rapid growth, comes competitive land grabbing. If you are not staking a claim in the market, as rapid as it is growing, your business might feel the pain.
As the market for cloud services emerges and confidence in consumption grows, there are many types of market entrants trying to stake claim in revenue. Hosting companies want to move beyond VPS offerings and managed service providers want to launch true cloud services and benefit from higher levels of utilization and data center automation. Most telecom companies are also coming to the cloud market, not just dabbling or dipping their toe in the water, but instead launching at scale, often across multiple countries and continents.