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To Win the Cloud Wars, Invest in Marketing, not Technology 

  • January 2016
  • 12 pages
  • Frost & Sullivan
Report ID: 3595967

Summary

Table of Contents

To Win the Cloud Wars, Invest in Marketing, not Technology

Introduction

Back in 2008, when cloud computing was just beginning to grip the industry’s consciousness, Oracle CEO Larry Ellison issued his infamous rant about the hype surrounding the new model: “The computer industry is the only industry that is more fashion-driven than women’s fashion… Orange is the new pink; and Cloud is the new SaaS; Cloud is the new virtualization…It’s really just complete jibberish.”

Regarding his own company’s plans to play in the new field, he said, “I don’t understand what we would do differently in the light of cloud computing, other than change the words in some of our ads.” 2 In terms of technology, Ellison had a point. There was nothing new about cloud; nearly all the technology and architectural components that go into a cloud have been around for decades: e.g., server virtualization, multi-tenancy, distributed computing, utility-based metering and billing, and network-delivered software.

What Ellison grossly underestimated, however, was the extent to which technology must be packaged, priced, and promoted to resonate with potential buyers. That is the domain of marketing. Thanks, in large part, to insightful marketers at Amazon Web Services (AWS) and other early cloud service providers, the “jibberish” surrounding cloud took root with businesses. The market responded positively to the positioning of the cloud as simple, self-service, low-cost, on-demand, nocommitment, and scalable.

Today, cloud service providers are facing a new challenge. As the market matures, and enterprise preferences become clearer, the Infrastructure as a Service (IaaS) market is beginning to consolidate and coalesce.
Cloud providers now offer IaaS services with similar technology, features, and functionality, leading many to characterize IaaS services as a commodity.3 In this context, it is even more important for providers to differentiate their services via characteristics that fall within the domain of marketing, rather than technology (e.g., price, promotion, and product definition).

Yet, in Stratecast’s observation, many technology companies, which are often run by engineers like Ellison, continue to underestimate the importance of marketing; instead, relying on their technology research and development organizations to introduce innovations. In this SPIE, Stratecast examines several service characteristics that shape buyer perceptions of cloud infrastructure services, as revealed in the 2015 Stratecast Cloud User Survey.

These include brand leverage, pricing strategies, service level agreements, interoperability positioning, and customer support. We also offer marketing recommendations for cloud service providers that are looking to improve their competitive positioning.

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