Will your cloud service provider survive?

Acquisitions enhance some, make others go away

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Stories about one vendor buying another are usually the AOP of the incisive Chris Nerney, but yesterday's announcement that Teradata acquired marketing and market-analysis software provider Aprimo made me wonder how fast the cloud-computing market is consolidating.

The answer is: pretty fast.

Not only did Teradata buy Aprimo this week, it also bought a data warehousing vendor called Kickfire in August.

The acquisition shift is actually going in two directions. Traditional data-center services providers are buying networking or software companies to add to their own capabilities and look more like one-stop IT infrastructure-and-software shops for mid-sized companies looking for rent-an-IT-shop.

Straight-up cloud companies are also buying each other to reduce competition and expand their capabilities as well.

In the long run the result will benefit customers by offering more services, stability and interoperability by building up the mid-sized providers into a market with enough providers that customers have choice and competition keeps vendors honest.

It reduces the chance that the market will fragment into a million tiny segments among which no one can coordinate any big projects, or one in which one or two giant companies offer take-it-or-leave-it service at high prices to most customers.

Keep that in mind during the due diligence part of your vendor-evaluation – the part where you look at a company's finances and try to figure out whether they can deliver what they promise they can.

And add this to the top of your list of questions cloud providers need to answer before you sign on for anything more than a basic pilot project:

How do I know you're going to be around in 2011 and that you'll follow through on your promises?

 

Here's a short list of who's been eating who, and just in the last month or so, too:

Teradata eats Aprimo for $550M

Salesforce.com buys Ruby cloud-app platform Heroku

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