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Price war by smaller providers saturating Cloud market: IBM

Price war by smaller providers saturating Cloud market: IBM

Enterprise technology vender also expects growing interest in private Cloud in the near future

There were some unexpected new entrants into the Cloud space, this year, according to IBM Global Technology Services Cloud computing executive, Dean Evans.

He said this happened while smaller Cloud providers saturated the market further by pushing a “pure cost/price discussion” around the service.

“The race to the bottom in terms of pricing has fuelled the perception of Cloud as a commodity rather than a value-based service that can enable major business transformation and growth,” Evans said.

Although falling prices are always welcomed by customers, Evans said the negative aspect of this approach is that it stunted the maturing of the Cloud market in Australia in 2013.

“While price point pressure will continue, there is the question of how long the industry can sustain it,” he said.

“This raises the question of whether customers can trust their smaller Cloud provider to stay in business and how that will impact the provisioning of services to their organisations.”

As a result, Evans said it distracted organisations from “leveraging the full potential” of the Cloud.

The move to private

As for whether the Cloud space is able to sustain all of these big and small players, Evans foresees “significant consolidation” beginning in the latter half of 2014 and continuing into early 2015.

“Consolidation will drive the pace market maturity, as organisation start to have more value based Cloud discussions focused on the business objectives and outcomes,” he said.

A movement towards public Cloud is also anticipated, which Evans attributes to organisations becoming more comfortable with the concept of the Cloud “conceptually and culturally.”

Even so, a push to get enterprise-based applications into the Cloud is also expected to take shape, potemtially leading to more interest in private and managed Cloud platforms.

“In terms of uptake of Cloud services, we will see an increase in PaaS [platform-as-a-service] and SaaS [software-as-a-service],” Evans said.

When it comes to PaaS, anticipated application upgrades from Oracle and SAP are predicted to fuel demand.

“From a SaaS perspective, we have seen more and more customer demand for SaaS, particularly in the areas of analytics, online commerce, mobile, and social/collaboration platforms,” Evans said.

Organisations looking for “smarter ways” to manage these technologies will be responsible for the growth, and Evans sees 2014 as a year where demand will remain strong.

Patrick Budmar covers consumer and enterprise technology breaking news for IDG Communications. Follow Patrick on Twitter at @patrick_budmar.

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