Migration to the Cloud Ecosystem: Ushering in a New Generation of Platform Competition

Headnote

Abstract: Cloud computing is defined to be Internet based computing technology, where the term 'cloud' simply means Internet - and cloud computing refers to services that are accessed directly over the Internet. There are essentially three categories of cloud computing, (i) laas (Infrastructure as a Service) - number crunching, data storage and management services (computer servers), (ii), SaaS (Software as a Service) - 'web based' applications, and (iii) PaaS (Platform as a Service) - essentially an operating system in the cloud. Much of the attention and literature has focused on the revolution in laas services provided via the cloud. Despite the major changes in technology in laaS services, estimates indicate that more than 90% of the cloud computing market (in terms of revenues) will involve (virtual) operating systems and applications software services (i.e., PaaS and SaaS services.) In this paper, we examine how several key economic factors will likely affect competition in SaaS/PaaS services in the cloud.

Key words: cloud computing, platform competition, network effects, two-sided markets.

Cloud computing is defined to be Internet based computing technology, where the term 'cloud' simply means Internet - and cloud computing refers to services that are accessed directly over the Internet. Cloud computing is the new buzz word in the information technology world - and some have described it as nothing short of a revolution that will dramatically change that world. From a technical point of view, cloud computing is clearly a revolution. A 'cloud' data server farm or cluster is a collection of computer servers maintained by a cloud provider to provide computing services on a massive scale. This scale can be used both for data storage and management services as well as providing software services.

Cloud computing services will be available from any device (personal computer, tablet computers, mobile devices, etc.) that connects to the Internet. This is because cloud computing technology infrastructure is NOT based on consumer premises. As of 2009, 70% of Americans already used some type of cloud service - mainly web based email.

Like the variety of cloud formations up in the sky, cloud computing comes in many shapes, forms, and sizes. And consistent with that metaphor, cloud computing means several quite different aspects of computing. There are essentially three aspects...