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[qi:051] The transition to delivering software, services and compute infrastructure via the web will change the dynamics of the IT industry, shifting power away from the services players such as IBM and HP and toward companies running monolithic data center operations such as Salesforce.com, Amazon or […]

[qi:051] The transition to delivering software, services and compute infrastructure via the web will change the dynamics of the IT industry, shifting power away from the services players such as IBM and HP and toward companies running monolithic data center operations such as Salesforce.com, Amazon or Microsoft, according to three Forrester analysts I spoke with last week. James Staten, John Rymer and Ted Schadler, who all cover what Forrester calls cloud computing and I would call delivering a variety of technology via the web, talked about how learning how to scale and deliver a single type of application or service is the best way to eke out margins in the cloud.

Staten uses the consistently growing and relatively stable revenue growth provided by software as a service as compared to the cyclical sales cycles for old-school enterprise software as an example of how delivering technology products such as infrastructure as a service will play out. Plus, if different types of clouds are delivered as a service, it becomes a fundamental disadvantage to vendors such as HP or IBM, which have built up an expertise around managing heterogeneous data centers, says Staten.

“For the server manufacturers, if the cloud becomes pervasive, then the people who are worried about taking your business away are also your biggest customers — and that’s a massive change,” Staten says.

Other vendors see things differently. Microsoft, for example, which has moved aggressively into the cloud by building its Azure platform as a service, sees a chance to build out a better way to deliver its software, and a way to garner more money by allowing customers to customize Microsoft products on the Azure platform rather than give that money up to a reseller or a consulting firm trying to customize Microsoft’s products. “Microsoft can make more money as a cloud provider than as a licensed server provider,” Schadler said.

The key for success as a platform vendor is to bring down costs by automating as much of the IT work as possible. That can be achieved by optimizing the platform or cloud to a particular type of software or specific function, then selling customers on higher-margin customization. Essentially all industry participants will have to provide higher-level services in order to make more money.

  1. [...] How the Cloud Will Disrupt the IT Status Quo (gigaom.com) [...]

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  2. andrew cummins Sunday, May 17, 2009

    What do you mean “will”? The cloud has already disrupted the quo. Are you really only now hearing about it?

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  3. [...] How the Cloud Will Disrupt the IT Status Quo (gigaom.com) [...]

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  4. [...] How the Cloud Will Disrupt the IT Status Quo (tags: cloud) [...]

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  5. [...] How the Cloud Will Disrupt the IT Status Quo by Stacey Higginbotham on GigaOm [...]

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  6. [...] where their data is being stored than what Amazon currently offers. The announcement also leaves me wondering when IBM and HP are going to announce their own big cloud computing plays, rather than webinars and research projects. I think this [...]

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  7. [...] wrote last month about how Microsoft can boost profits if it delivers higher-value services on top of its Azure cloud. The desire for higher margins is why IBM has said it’s less [...]

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  8. [...] face in the clouds, Microsoft Azure has a dark side (maybe it’s navy?) in that it will reduce the software company’s profits (though it may, at the same time, generate additional re…. However, Microsoft knows this, and so far has warned investors about what the cloud stands to do [...]

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  9. [...] der Infrastruktur zusätzliche, höhere Kosten verbunden. Jedoch bietet sich dadurch auch die Chance zusätzliche Umsätze zu erzielen die vorher an verschiedene Beratungs- und Dienstleistungsunternehmen zur individuellen [...]

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  10. [...] In fact its worse than that, in a cloud world Redmond believes they can make more profit. Forrester agrees with [...]

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