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Global Cloud Vendor Profiles

  • August 2013
  • -
  • Frost & Sullivan
  • -
  • 100 pages

Cloud computing services are expanding as opportunities in the cloud computing market continue to emerge despite an increasingly competitive marketplace. This market insight provides a snapshot of 8 participants in the cloud computing market. These vendors reflect a mix of participants that are targeting cloud opportunities from their core areas. Furthermore, it outlines these participants’ competitive strategies. The service also examines the cloud computing market in general and its development trends. The base year for this service is 2012.

Research Objectives and Scope

•The purpose of this analysis is to provide a snapshot of market participants with unusual approaches to cloud computing opportunities. The Xvendors profiled are not representative of the entire market, but they reflect a mix of participants that are targeting cloud opportunities from within their own core areas.
•The profiles also reflect the entry of new market participants, both information technology (IT) and communications providers, with new business models or propositions.

Key Findings

Market Development Directions
•General shifts are moving away from IaaS because vendors are searching for higher margins.
•Separately, cloud computing propositions are growing because this service offers a way to manage big data. This means visualisation will become an important differentiator and require further development.

Client Needs
•Cost drivers and security concerns remain present among enterprises.

Market Competition
•The market shows a fragmented landscape, with a dual approach for both establishing cost leadership in IaaS and establishing differentiation via software as a service (SaaS) and platform as a service (PaaS).

Entry of Telcos in the Market Mix
•Telcos are acting as service brokers.

Development Directions

Development Directions:
•Big data analytics and visualisation
•Mobile applications available with cloud computing
Big data and cloud computing are growing in tandem. An increasing number of business transactions and new sources of information (e.g., social networks) require dedicated big data solutions. Cloud computing offers a cost-effective way to seize big data opportunities without massive investments in on-premise solutions. The penetration of smartphones and other mobile devices has created a new niche for cloud vendors and is driving the development of mobile cloud computing.

Development Directions:
•Emerging markets in Asia-Pacific (APAC) as main targets
APAC seems to be the most attractive market for cloud vendors and draws the most data centre investments. APAC also offers more growth opportunities than Europe, the Middle East, and Africa (EMEA) and is more attractive as a data centre location due to investment incentives and regulations that are not as strict as those in Europe.

Development Directions:
•Moving from pure IaaS to a complete cloud environment
PaaS and SaaS markets offer higher margins than IaaS markets. The SaaS model is used to handle non-critical business processes, but over time, more mission-critical applications will be delivered through SaaS. Big cloud participants have invested massively in acquiring smaller cloud technology providers to enhance their cloud capabilities. Growth in spending on mergers and acquisitions (M&As) and an increasing number of strategic alliances are strong indicators of the commitment of information and communication technology (ICT) vendors to these markets.

Client Needs

Target Group:
•Depending on Company’s strategy
Cloud vendors have adopted ambitious development strategies and are aggressively fighting for new client groups. However, there is no common target group among cloud vendors. Some of them focus their offerings on small and medium enterprises (SMEs), while others focus on the high-end market and big enterprises. Other vendors decide to target specific sectors offering vertical solutions.

Driving Force Behind Cloud:
•Cost reduction
Cloud companies have a bright future given the tight IT budgets of companies. The cloud market is driven by capital expenditure (CAPEX) reduction targets and greater flexibility needs.

Major Concerns:
•Giving away key business processes and control over data
Many customers still hesitate to move to the cloud due to security concerns. Large enterprises, in particular, do not want to share hardware and move their mission-critical processes to a cloud that is public. However, they are more positive about hybrid clouds and about private clouds that have been developed behind their firewalls.

Criteria for Choosing Cloud Provider:
•Price and SLA security
Price and easy deployment are important, especially for start-ups and young companies. Other clients prioritise service-level agreements (SLAs).

Market Competition

Market Structure:
•Fragmented
The market took off with IaaS and was initially dominated by large IT participants. With Amazon as a forerunner, the cloud market has developed rapidly, and more and more IT companies are willing to enter the cloud market to make up for decreasing software and hardware sales. Year after year, the cloud market has become more fragmented and less monolithic. There are more and more small companies offering customised cloud services. On the other hand, the market is showing signs of vertical consolidation, which is true especially for big participants that enhance their services by buying out smaller cloud technology providers.

Competitive Strategies:
•Cost leadership (IaaS)
•Differentiation (SaaS and PaaS)
IaaS: The entrance of large companies, such as Google or Microsoft, and smaller IT providers marked the beginning of an on-going decrease in the price of cloud services, which has been described as a price war. Since 2006, prices for using the cloud have decreased significantly; are now about XtoX times lower than pre-2006 prices.
IaaS, SaaS, and PaaS: Another market battlefield concerns technology. Many IaaS participants have started adding new features to their products and are constantly enhancing their portfolios by moving to PaaS and SaaS offerings. To survive, cloud vendors must continue improving their business models. Hardly any IaaS provider believes that pure IaaS products will be enough to survive in the cloud market.

Entry of Telcos in the Market Mix

Telcos in the Cloud Market:
•Service brokerage model
Telcos will probably act as the brokers of cloud services and will not build their own infrastructure. They will take advantage of their global assets and connectivity. IaaS will remain an area of expertise for IT vendors.
As the telco market is reaching a saturation point, telco operators have started developing their own cloud offerings. However, contrary to IT and Internet giants, they need strong technology partners to be successful. Some of them want to develop a full cloud portfolio that includes IaaS, but doing so requires high infrastructure investments. By focusing on becoming cloud service brokers, telcos would take advantage of their network, allowing them to concentrate on delivering innovative services beyond voice offerings without having to build their own cloud infrastructure.
A brokerage model will probably prevail in the future because it is more client oriented and brings higher profit margins than offering pure IT products. It requires lower CAPEX and enables quick times to market. Therefore, in the forecast period, telcos are unlikely to threaten big IaaS vendors.

Table Of Contents

Global Cloud Vendor Profiles
Table of Contents

Executive Summary 4
Company Profiles 11
AWS 14
CloudSigma 24
IBM 30
Microsoft 42
NEC 53
NTT 62
OBS 72
Rackspace 81
Conclusions 91
The Frost and Sullivan Story 96

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