Cloud market: future mass market, oligopoly or monopoly?

The outstanding opinion about whether there will be an oligopoly or monopoly of cloud providers in the future is a resounding, “No”. However, life is not so simple and it emerges that the definition of what a cloud provider is can literally make the whole question much foggier than one would immediately think. This is because there are a number of different players within the cloud computing market, and each of them contributes in some way.

“Firstly, we have to look at how cloud if defined”, says Quocirca founder Clive Longbottom. This issue means that the market takes no real shape, and so it is unlikely to take the same form as the car market has had to do. "Here, the general public knows that they want to buy a car, but the manufacturers know that there is no such thing", he explains before adding that what amounts to ‘a car’ is defined by a number of categories: a mini, an executive, family, luxury, an off-road, an SUV, a sports, and a super car. This range of offers had been created to cater for the different needs of diverse customer types. So cloud providers will need to decide what kind of 'cloud provider' they are. Their definition depicts their market and with whom they compete – from hosting to outsourcing companies.

Increasingly competitive
"I believe the market is increasingly competitive, but you will see competition at different levels", says David Chalmers – technology director for Hewlett Packard’s Enterprise Bureau Group. In his view the competitive nature of the market doesn’t mean that customers will be keen to buy from a single supplier. That’s because there is a drive towards hybrid cloud solutions, involving a number of suppliers. Each one of them will compete on a local and global scale; the services they provide will be project-based because the mission critical applications and services will be kept firmly locked in-house – at least to begin with.

Chalmers says that vendors like HP, Amazon, IBM and Microsoft will lead the market, but “there will be many more geographically sensitive suppliers, and while this may seem counterintuitive to the concept of the cloud this reflects the reality that users today need to know from where the services they are buying are being delivered.” This means that customers are looking for suppliers that are based in the UK and in the European Union to supplement the global service they’ve also bought into.

No electricity model
"This is important because users will want and need to build cloud services from a different mixture of different sources, and this is going to be the challenge for them, particularly as cloud services will not be anything like the electricity market model”, he explains before forecasting that there will be many new entrants to the market over the next five years. They will emerge from the bottom-up at a local level, offering smaller and highly focused market solutions – including industry specific ones. In contrast he predicts that there will be very few global players because the cost of entry into the market is too huge. The new entrants will typically be small companies who can’t afford to have their own data centre, and so they will need to partner with a larger firm that is already offering access to one.