The real target of the announcement is Amazon Web Services [AWS], which has pioneered the Infrastructure-as-a-Service [IaaS] frontier that has redefined the way computing power is packaged and delivered to the marketplace.
Although AWS hasn’t threatened to enter the telecom business, like Google (GOOG), its success in the cloud computing market has raised the bar for telcos who have been laboring in the hosting business for many years.
AWS’s claim to fame in the cloud computing arena has been the hyper-elasticity and minuscule price-points of its IaaS solutions, which are bolstered by a myriad of third-party tools vendors. These services have primarily appealed to tech-savvy users, large and small, willing to cobble together these on-demand, online resources to meet their situational computing needs.
Verizon is countering with a bundled program which promises greater ease-of-deployment and more management control for SMBs with less hard-core technology skills and those more comfortable doing business with service providers they know.
Amazon (AMZN) continues to challenge the tech industry’s computing norms by offering increasingly frictionless service delivery and spot-pricing for its cloud computing capabilities. The most recent example is its new EC2 Micro Instances low cost option for low throughput applications.
Unable to match AWS on price, Verizon (and other major players such as IBM, AT&T (T), etc.) is betting on the greater comfort levels which mainstream businesses feel toward established brand-name companies who can serve as strategic sources boasting better support.
The good news about the heightening competition in the cloud computing market is that the growth in demand is not likely to be satisfied or subside anytime soon.
After casting doubts about the durability of the cloud computing model for the past few years, the major market research firms now admit that interest and adoption of cloud computing-- by organizations of all sizes and across every industry-- is exploding.
Therefore, today’s upstarts as well as the fast-following established players can both compete on their own terms and find success. However, no industry can survive a ‘cloud rush’ like today’s proliferation of players without a shakeout.
A few cloud vendors will survive trying to compete on price in a cost-sensitive marketplace. But, most of the long-term winners will be those cloud vendors who offer other value-propositions, such as greater ease-of-deployment and support, and win the confidence of customers despite their premium prices.
SMBs and large-scale enterprises will benefit from the escalating competition in the cloud, which is producing faster innovation and accelerated maturation of service provider business models.
Disclosure: No positions