A recent study from the Synergy research group suggests the cloud is turning into a clash of the titans.
The ‘Big Four’ cloud service providers (CSPs) – Amazon Web Services, Microsoft, IBM, and Google – are claiming a combined international market share of 54 percent, having grown for the second year running.
Yet many smaller cloud providers are far from being pushed out of the market by these larger players.
With specialist partner relationships and a deeper understanding of their businesses, many small- and medium-sized CSPs are helping to migrate more services to the cloud. Often this requires a CSP to take the role of trusted adviser, guiding the partner on their journey as they migrate. Although larger providers offer these services, many of the bigger names lack the specific industry knowledge and tailored solutions supplied by the smaller CSPs. This discourages many from migrating to the cloud. Therefore, these CSPs have a huge opportunity to serve companies wishing to migrate to the cloud.
These partnerships go both ways. The titans are dipping into the channel to extend, complement, and round off their own service offering by working with (or buying out) firms with the customer base and technological know-how outside their field. This also allows them to benefit from the agility and autonomy to innovate and develop services for a niche audience through which many small providers thrive. From here, they are encouraged to feed back into the industry through the enhanced platform offered by the larger supplier.
Marketplaces, such as the Microsoft Cloud Solution Provider programme, enable partners to take control of their entire consumer lifecycles, and deliver Microsoft cloud services along with their own value-added services. This lends much more flexibility and reach to the partner, and integrates each otherwise incongruous development into the product lifecycle. These programs also are able to automate otherwise unwieldy features – such as provisioning, billing, and customer management – as easy-to-use bundles.
By merging knowledge with service automation, partners to CSPs are uniquely equipped to create bundles through pre-existing solutions or using existing anchor services, or both. These integrated solutions leverage the abilities of the smaller CSP to perform on a larger scale and reach out to a greater sample of partners. While bigger doesn’t mean better, often the profit margin is larger. The range of partnerships available to CSPs is defining a new model of collaboration. This complicates the idea of market share, but holds the potential to mutually increase companies’ value, regardless of size.
Rather than having the bigger names ‘clean up’ in a saturated industry, the emergence of the Big Four shows the strength of the cloud. It shows the market’s ability to withstand conflicting market tensions, and to retain growth in both sectors, despite this split. On the one hand, the standardized service and value for the money offered by the larger names increases as the cloud reaches maturity. On the other hand, customer demands they cannot satisfy can be met by the smaller players.
The current landscape says just as much about the minnows’ success as it does about the big fish, as each diversifies its approach through selective partnerships across the channel. You don’t always need to be bigger to be better, but you do need the right tools and solutions. By focusing on providing a level of personal customer experience the Big Four can’t, and serving the particular needs of a unique group by providing more customisable value-added services, smaller CSPs can level the playing field.
Jacek Murawski is EMEA general manager and vice president, Odin
