With each new milestone in technological evolution we've seen a company emerge as the clear leader. In the current landscape, we observe this happening in several key parts of the marketplace including networking, search and operating systems.
Cloud computing is a new disruptive force that makes us ask the question whether we'll see the future of the cloud dominated by a single company. In this multi-part series, we'll take a look at a handful companies and envision what the world might look like, if, in fact, they win it all. We'll also analyze what it will take for a new company to rise up and claim the leadership role in this chapter of computing.
Dominance Happens: A Bit of Recent History
There has been a love/hate relationship with companies that dominate markets. On one hand, it's us consumers that make it happen. But when they become giants we cheer as governement regulators and competitors knock them down.
Microsoft has faced this issue perhaps more than any company in the past few decades. When the browser battles were in full swing in the late 1990s, Microsoft was taken to court by the Department of Justice for antitrust violations.
In this note released in 2000 - Technology, Market Changes, and Antitrust Enforcement -Microsoft evaluated the idea of whether it was consistent with public welfare for a company to "win" a technology market, and what it means to have a network effect in technology.
Microsoft makes the point that no technology company will hold a dominant position for long if it doesn't innovate and expand the market definition. Additionally, if a company doesn't find the right balance of trust and pricing between its customers new technologies will find a way into the market and cause customers to defect.
Point: A Dominant Vendor Will Emerge in the Cloud
Taking these factors into consideration, we believe there are several points that can support the argument that a dominant player in cloud computing in the future. Due to the nature of market forces a single vendor will emerge as the clear leader in offering cloud solutions.
- First mover advantage: We're already seeing amazing things happen at first-movers like Amazon that are defining product and pricing. This gives them an advantage in fueling further growth and by learning and iterating the solutions in the market. Being first in an infrastructure-driven business will help them reach scale that others just can not reach easily - and potentially price it where others can't match.
- Vendor lock: Once you get started with an infrastructure provider it becomes interwoven into business operations. By the current nature of the cloud (e.g. little standards, a lot of innovation) being first with leading solutions adds more momentum to the first-mover that wins strategic customers.
- Strategic synergies: When we look at the combination of cloud computing and collaboration, we see a natural fit in services that meet more needs and take more market share. It may just work out that bundling works also in the cloud and creates the network effect that Microsoft is famous for. Cisco is also partnering across the landscape, with a focus on preparing the network for the cloud. By making it easier to manage your cloud with Cisco gear, it will provide IT leaders a reason to expand their relationships today, and stay tomorrow.
- Acquisitions and Partnerships: Companies that buy their way into the market will be a big factor in putting momentum behind their offerings. Companies to watch: VMware, Cisco, Oracle. These companies are already showing that the race is on to win the cloud through aggregation of capabilities. Cisco has a blog dedicated to Cloud Computing, Oracle is going on tour sharing its ambitions for the cloud
Counterpoint: A Dominant Company Will Not Emerge in the Cloud
Perhaps no single organization will have the ability to create a dominant foundation in cloud computing. Instead, we'll see many types of solutions as equal peers in the market.
In a way, this runs against the grain of existing technology landscape and our history with successful innovations. Maybe that is why we love the idea of the cloud itself?
- It's too big to own: One big reason to doubt a single dominant force in the cloud is that it feels like owning the Internet. Even Cisco with its strengths can't make such a claim. Perhaps the cloud is the perfect market, where the barriers of entry are low enough that continual evolution will occur.
- It's a movement, not a layer: Another argument against the cloud having a dominant player is its fuzzy definition. There are many parts and pieces to it, and it's not clear today what it would mean to "win" the cloud computing market.
- Portability will keep vendors in check: If customers demand solutions where they can move from vendor to vendor freely, it will impact the landscape. Companies with cloud solutions in the marketplace could be required by these customers to remove barriers to moving data and services between different entities. Additionally, standards and best practices may emerge that allow companies and individuals to move freely between providers. In this world, it will become a fluid market that prevents vendor lock and promotes pricing and trust as brand differentiators.
A Glimpse at Potential Futures
We've compiled a list of companies worth reviewing as candidates as possible dominant players in cloud computing. We'll be looking at their brand and the available assets that could be leveraged to achieve this position. Finally, we'll take a fresh look at what it might feel like if they succeed and shape the brave new world of cloud computing.
The list of candidates we're analyzing includes: Google, Microsoft, Apple, VMware, IBM, HP, Cisco, Amazon, Salesforce, Facebook, and our favorite, Insert new startup to our list by adding a comment below.
Please let us know what you hopes and fears are with the cloud computing marketplace. Any companies we should we add to our list (or remove)? What's your take: Is there one company today that is best positioned to win the cloud?