Cloud Computing – Amazon, Google & Co against HP, IBM & Co

A recent article in the Bloomberg Businessweek titled “ The Cloud: Battle of the Tech Titans” stated that cloud computing will profoundly change the competitive environment around how people and companies purchase computer technology. The new paradigm will be hardware makers like HP, IBM  and Cisco against service companies like Google, Amazon and Microsoft.  According to an analyst from UBS, Amazon is signing up hundreds of thousands of customers for its cloud service offering (AWS) and will be pulling in $750 million this year selling its cloud service. Some of Amazon’s prominent cloud service clients are the movie streaming company Netflix and the social media game maker Zynga.

As of now the cloud only accounts for about 5% of the huge market of corporate IT, estimated to surpass $1.5 trilling this year. The market share is small, but it is growing quickly and will create a new and interesting landscape of IT suppliers. Cloud service providers like Amazon, Google and Microsoft are pitching with significant cost improvements. Yet this will certainly not be the case for every company and for every application (see also blog post about the costs of running scientific applications on the cloud and the post about how WAN costs influence cloud ROI) . And of course not every business will be equally suitable to move to the cloud – thinking about banking and legal restrictions regarding moving client data out of the house.  We expect that the main growth will be coming from small businesses and startups or as Andy Bechtolsheim put it in the article:

“This stuff finally works,” says Andy Bechtolsheim. “If you’re a startup, you would never build a data center again.” Bechtolsheim co-founded Sun Microsystems and built the company’s first computer workstation, which itself set off a revolution of lower-cost systems for businesses in the 1980s.

And as Bill Gates rightly stated, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don’t let yourself be lulled into inaction.”, the move to the cloud will not happen over night, but it will certainly happen in the long run – as it happen in the utilities about 100 years ago.


About Georg Singer

Georg Singer is an analyst at the University of Tartu in Estonia. He works for the institute for computer science on cloud computing economics.


  1. Research group digest – - March 25, 2011

    […] Cloud Computing – Amazon, Google & Co against HP, IBM & Co How are the competitive relationships between hardware suppliers and service companies on the Internet impacted by the new utility computing paradigm. […]

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