Amazon faces commodity cloud competition

By Bernard Golden, CIO |  Cloud Computing, Amazon, Amazon Web Services

2. Redmond and Mountain View fight. In a head-to-head between commodity providers, Google prevailed in a competition to sell online office services to Dominion Enterprises. Dominion's CIO noted that Microsoft was 50% more expensive than Google. Here's the kicker, though. Google's price was $200,000, compared to $300,000 for Microsoft. What did this new office service replace? Microsoft on-premises software that was $2 million per year. So Microsoft and Google were competing to reduce Microsoft's current price by up to 90%. Now that's commoditizing a market.

Many people in IT draw a distinction between consumers and enterprise users. As these two example illustrate, commoditization is a powerful trend that will sweep through all markets. For those with long memories, the PC originally represented this same phenomena, and it utterly transformed both vendors and users. Cloud computing is the next platform shift-and it will have at least the same transformative impact.

Expect to see a bloodbath in the cloud service provider market as the commodity players fight for share and the enterprise players struggle to differentiate sufficiently to overcome pricing disadvantages. One thing I think it's safe to predict: The next few years are going to be interesting times indeed.

Bernard Golden is CEO of consulting firm HyperStratus, which specializes in virtualization, cloud computing and related issues. He is also the author of "Virtualization for Dummies," the best-selling book on virtualization to date. Most recently Wired named him one of the Top 10 Cloud Influencers and Thought Leaders. Follow Bernard Golden on Twitter @bernardgolden.

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Read more about cloud computing in CIO's Cloud Computing Drilldown.


Originally published on CIO |  Click here to read the original story.
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