cloud computing industry analysis
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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
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