Cloud ComputingIndustry Analysis

Sumaya ShakirSeptember 2012

A comprehensive industry analysis based on Porter’s five forces and evaluation of the competitive landscape

Competition Landscape

Market Players

Market Penetration

Source: From Zenoss Survey, Referenced in Thinking Out Cloud blog

Industry Growth

Rivalry among existing firms

Source: Gartner’s Magic Quadrant

Rivalry among existing firms

Barriers to Entry

Threat by new entrants Threat Level Weight

Economy of Scale 1 15%

Product Differentiation 2 15%

Capital Requirements 1 15%

Switching cost 2 15%

Network Effects 2 10%

Access to Distribution Channel: 1 50%

Cost disadvantages independent of scale 1 10%

Government Policy 2 10%

Weighted Average: 1.9

Barriers to Entry

Threat of New Entry is Low because:

• Profitability requires economies of scale• Products are differentiated• Brand names are well-known• Initial capital investment is high• Network Effect influence is high• Consumer switching costs are high• Cost advantages independent of scale is high• Accessing distribution channels is difficult• Location is an issue• Proprietary materials is an issue• Government policy is an issue

Barriers to entry is low

Buyer Profile

According to a research white paper by Bain & Company, the following are categories of cloud buyer’s profile ,

• 12 percent of cloud buyers are price conscious and value cost savings.

• 22 percent of cloud players are safety conscious and are risk adverse. They see value in cloud but place safety considerations above price.

• 11 percent of cloud buyers are early adopters that have already moved 40% into cloud

• 11 percent of companies are heterogenous, they use cloud only for some of their environment in cloud and the rest in their own environment.

• 44 percent of the remaining companies are potential cloud buyers who are not yet moved into cloud but slowly considering it.

Buyer Concentration

Buyer concentration is Medium High

Level 3 Analysis

Threat to Industry

Low Medium High

Threat of substitutes x

Treat of new entrants x

Rivalry among existing firms x

Bargaining power of suppliers x

Bargaining power of buyers   x  

A detailed white paper is available, please contact the author.

White paper: Porter analysis of Cloud Computing Industry by Sumaya Shakir