Cloud computing, often referred as “the cloud”, is an IT paradigm enabling access to shared pools of configurable resources. It’s composed of 3 types of services, which are software-as-a-service (SAAS), platform-as-a-service (PAAS) and infrastructure-as-a-service (IAAS). SAAS, such as Google Docs, allows customers to use provider’s application running on a cloud infrastructure for data storage and project collaborations. PAAS (e.g. Cloud9 and Codiad) enables to process data stored on an online platform, without the complexity and the cost of managing and investing in the underlying hardware. Another service model, IAAS (e.g. Amazon S3 and Azure), provides companies with computing resources online, including servers, networking, storage and data center on a pay-per-use base.
According to Oracle’s Dave Donatelli, Executive Vice President of the company’s Cloud Business Group, “If you’re in the infrastructure business the Cloud has fundamentally changed the industry”. “… any hardware vendor without a successful public Cloud business will face significant business challenges.” Traditional incumbents must figure out the Cloud Computing issue to survive under the disruptive technology. But what is the exact impact of Cloud on traditional hardware and software industry?
- The Cloud is slowly overtaking B2C software products (e.g. Microsoft Office) and hardware products (e.g. USB) by moving services to cloud platform online, which changes the whole business model of the entire software and hardware industry.
- In B2B service, The Cloud decreases demands of servers and storage infrastructure in 2 ways:
- Decreasing corporates’ hardware upgrading demand by freeing their existing hardware from complicated operations.
- Decreasing corporates’ hardware initial investment by lowering capability uncertainty.
- The Cloud changes the critical attributes of hardware in the market to fit the new cloud trend. For example, cloud service providers seek scalable, stable and cost-efficient hardware that provides cloud service better, instead of high-end hardware that fits traditional infrastructure. Also, corporates and individuals tend not to need large capability but thinner hardware that provides good internet connection.
- The disruption can be explained by 3 reasons:
- The traditional industry is newly easy to enter since the cloud technology and concept changes the industry business model by shifting services from offline to cloud platform online.
- The traditional markets are attractive to attack since some incumbents subsidise other unprofitable sectors with profits from software industry such as Microsoft.
- It is difficult for the traditional industry to defend the new cloud trend because of large sunk costs, legacy system and lock-in customer base.
The future of the Cloud entails possible changes to software products and IT structures. Network requirements (depending on the size and growth of the firm) will be rapidly matched by the Cloud Computing model counterpart. This will help firms scale up their IT infrastructure. Firms may use multiple Cloud services to not be stuck with one provider, however, this will require additional IT training for the respective Cloud platforms. Lastly, the Cloud has some concerns for security, and therefore in-house technology and Cloud usage must find its balance.
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Created by group 3 (N. Chen, D. Ozer, D. Jia, Y. Kang)
