OK, we're not there yet. But, it's becoming obvious that the cloud computing market is heating up: there's been some downward pressure on IaaS pricing because of the number of competitors and, more importantly, because of the competition between Amazon and Google. Of course, this is to be expected because Google is trying to steal market share and AWS is trying to protect its share. Can we expect the same in the SaaS market? Probably, given that there has been a proliferation of SaaS companies (cloudwashing aside, see my previous post) in the last couple of years,. But then, there doesn't seem to be an enormous amount of overlap in the types services offered (yet?) because of the variety of solutions that are available for conversion to SaaS so we may not see the same price pressure as in the IaaS market.
That said, I don't think that the winner will be decided by its implementation of IaaS: the winner will be decided by PaaS. The reason for this is that every successful business model has had a strong developer community. Consider that the same thing happened with browsers and operating systems, and is currently happening with smartphones: smartphone leaders have stronger developer communities while weaker/less popular smartphones have fewer; such is the difference between iPhone and Blackberry. Granted, the gap between iOS devices and BB devices has other reasons as well, the point is that if BB had a stronger developer community than the iPhone, it would have won out earlier and not have to jump through hoops like it's doing right now.
Mobile providers should really take the hint here. Telcos are fighting for mobile market share but haven't really clued in that what attracts customers is not the phones themselves because every carrier has roughly the same phones for sale. What's really attracting them is the cool factor of what they can do with those phones. If the carriers really wanted to attract customers, they'd open up development platforms/PaaS environments for developers to create apps for free and then, when the app goes live, charge the developers to host their apps or collect ad revenue in exchange for free hosting. Like AT&T has done. Instead, most telcos and mobile carriers, are ignoring the PaaS possibility and looking to commoditized services with slowly eroding margins, like cabled connectivity, or to be me-toos in an almost saturated IaaS market to help grow their business.
There is no doubt that AWS is leading the way with $3.8B revenues projected for 2013. This definitely defines a leader in the market and AWS is certainly running away with the IaaS market. But Amazon did not stop at IaaS. It created a constellation of products built around EC2 to facilitate developer adoption. And that is why AWS is way ahead in the market.
It remains to be seen whether competitors in the PaaS market can steal away market share from AWS:
- Will Microsoft's Azure software development kit for Windows Phone attract developers to Azure?
- Will ActiveState's deal with HP will help it gain traction?
- Will SalesForce's Force.com ever face any real competition?
- Will mobile providers ever wake up and smell the coffee?
- Or will the PaaS winner be the platform that integrates with AWS?
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