Gartner cloud computing Magic Quadrant pits AWS against the world

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

Membership in the MQ is a gift that keeps on giving. Companies on the forthcoming 2013 cloud MQ list are going to be front-runners for enterprise opportunities and will undoubtedly grow significantly. If one believes (as I do) that the CSP business reflects significant economies of scale and growth enables spreading fixed costs across larger amounts of variable revenue, this implies that MQ occupants will probably financially outperform non-MQ CSPs. Over time, this financial edge will lead to a strong distinction between market leaders and everyone else, much like the strongest riders in a bicycle race separate themselves from the peloton.

For the non-MQ CSPs, failure to join the breakaway group means that they have to find a way to be successful with more limited upside. This will force them to move away from me-too offerings and find some basis of differentiation that lets them succeed with a focused offering.

There are two differentiation avenues open to these CSPs: technology and business segmentation. Regarding the former, it might be possible for these CSPs to, say, focus on certain kinds of storage or, perhaps, high-performance computing. In my view, this is probably not likely to be a successful strategy in the long-term; it requires significant technology skills and funding, both of which are more available to the MQ occupants.

Analysis: Cloud Service Providers Challenge Traditional IT OutsourcingFrom IDC: High-Performance Computing Poses Challenges for SMBs

This leaves business segmentation as the most likely vehicle for the second-tier CSPs. In other words, focus on certain vertical industries. For example, a Houston-based CSP could build a strong oil and gas knowledge base, with employees well versed in the technologies of this industry and familiar with the legal and regulatory compliance issues present for companies in the industry, not to mention a sales force that can be targeted toward oil and gas companies with specialized selling tools.


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