Most people out there consider IaaS the “dog” of all the cloud computing layers, given its low margins, tough competition and gradual commoditization. However, one thing that is going well for IaaS is that its position as the building block of cloud computing. That makes IaaS the starting point for large enterprise’s consideration of transition to the cloud.
Now, IaaS is turning out to be a new turf war between the cable and network providers. Verizon purchased Terremark, CenturyLink picked up Savvis, Time Warner acquired Navisite, and AT&T might be a little anxious to go shopping as well with all this commotion. That is signaling consolidation in the cloud provider space. It will be interesting to see how the cloud pioneers and startups can continue to remain independent in the battle between the behemoths for capturing the attention of large buyers for cloud deployments. As the consolidation progresses, PaaS and SaaS providers like Google and Salesforce.com will need to find partners among the cable and network providers to be part of the discussion with the clients.
We are moving towards an oligopolistic industry in which the providers must better understand and respond to the needs of buyers in their respective industry verticals like healthcare, education etc., for prospects to warm up to the idea of leveraging the cloud. (For more insights, please read our recent blog, “Talking the Talk, but not Walking the Walk, in the Cloud”.) Network providers and IT service providers are going to have to urgently fill this vacuum. With many small players trying to race to the top by claiming to be everything to everyone, it’s difficult to meet the custom needs of a vertical business or entity.
What does all this mean for legacy IT service providers like HP, IBM, Cisco, and EMC? They must be happy, as they are receiving some relief around the price wars and commoditization of hardware infrastructure like servers and storage, as the telecom and cable operators will go to a familiar source for their hardware needs.
IaaS providers must be enjoying the attention they are receiving all over again, as PaaS and SaaS providers have had their fair share of the limelight.
What do you think will happen in the IaaS space?