Cloud Computing Business Models Review
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This document analyzes cloud computing business models in Taiwan. It identifies 4 clusters of companies: 1) Public infrastructure as a service (IaaS) providers like telecom operators 2) PC and notebook manufacturers developing customized solutions 3) IT companies introducing new solutions to existing clients 4) Application service providers rebranding as cloud service providers It evaluates these clusters using market share and growth rate, finding application providers have the most lucrative "cash cow" model while public IaaS providers face challenges as "question marks". It provides recommendations on business strategies and government policies to support cloud computing.
Cloud Computing Business Models Review
- 1. Taiwan Cloud Computing Business Models Review Kenny Huang, Ph.D. 黃勝雄博士 Executive Council Member, APNIC Member, Board of Directors, Mind Extension huangksh@gmail.com 2015.Aug.30
- 2. Research Questions • What kind of business models exist in the local market of cloud computing ? • What is best practice among these models? • Business strategy recommendations • Government policy recommendations 2
- 3. Definition NIST Cloud Computing • Service Models – IaaS : Infrastructure as a Service – PaaS: Platform as a Service – SaaS: Software as a Service • Deployment Models – Private Cloud : system integration, solution providers – Community Cloud – Public Cloud – Hybrid Cloud 3 Source : NIST
- 4. Competition Theory • BCG (Boston Consulting Group) Matrix – The growth–share matrix • Five Forces of Competitive Position Model – Michael Porter • Is the internet driving competition or market monopolization – Justus Haucap • Two-sided Market 4
- 5. Taiwan Cloud Computing Companies Highlight (Selected) 5 Service Models Deployment Models Solution id Taiwan-based Company SaaS PaaS IaaS Private Public 1 Chunghwa Telecom Co. (中華電: hosting, security, storage) v v v v 2 Taiwan Mobile Co., Ltd (台灣大哥大: hosting, security, storage) v v 3 Far Eastone Telecommunications (遠傳: hosting, security, storage) v v 4 Taiwan Secom Company Ltd.(中興保全中保無限: IoT) v 5 HTC Corporation (宏達電) 6 MiTAC Information Technology Corp. (神通) v 7 Quanta Computer Inc.(廣達) v 8 Advantech Co.Ltd (研華科技) v 9 ASUS Cloud Corporation (華碩: storage) v v v 10 Hope Bay Technologies (和沛科技) v 11 Syscom Computer Co. (凌羣) v 12 Stark Technology Inc. ( 敦陽) v 13 Gamania Digital Entertainment Co., Ltd (遊戲橘子) v v 14 KKBOX Taiwan Co., Ltd. (願境網訊) v v 15 Spring House Entertainment Technology (春水堂) v v Source : TW Cloud Association; firm websites;
- 6. Observations and Clustering A. Public IaaS (online storage especially) is preferred for telecom operators (id 1,2,3), new cloud service provider (id 9). – New product vs. new market B. PC/Notebook manufacturers (id 6,7,8) develop customized niche solutions – Old product (auxiliary features) vs. old market C. IT companies (id 11,12) introduce new solutions to the existing clients – New product vs. old market D. Application Service providers (id 13,14,15) rebrand business model (from ASP to CSP) – No Change 6
- 7. Constructs and Types of Data 7 Market Share Market Growth Rate Quantitative Data Quantitative DataType of Data N/A N/AData Availability Expert Interviews Expert Interviews Alternative Research Method
- 8. Likert Scale Data Analysis Market Share vs. Market Growth Market Share Mean S.D. Market Growth Rate Mean S.D. Expert A Expert B Expert C Expert A Expert B Expert C Cluster A 3 1 3 2.3 0.94 4 6 3 4.3 1.25 Cluster B 2 4 3 3.0 0.82 3 2 3 2.7 0.47 Cluster C 2 4 2 2.7 0.94 4 2 3 3.0 0.82 Cluster D 4 5 4 4.3 0.47 2 2 3 2.7 0.47 7 Point Likert Scale : 7: Very High ; 1: Very Low Cluster A : Public IaaS providers Cluster B : PC manufacturers Cluster C : IT and solutions providers Cluster D : Application Service Providers (ASP)
- 9. 1 2 3 4 5 6 7 1 2 3 4 5 6 7 MarketGrowthRate Market Share Value Proposition of Cloud Business Model 9 A C B D StarsQuestion marks Cash cowsDogs Source : BCG
- 10. Cash Flow Implication 10 Relative Market Share HighLow MarketGrowthRate HighLow Cash used - - - Cash generated +++ 0 Cash used - - - Cash generated + - - Cash used - Cash generated + 0 Cash used - Cash generated +++ ++ Cluster A Cluster B,C Cluster D Source : Olivier Furrer
- 11. Business Models Review 1/2 • Cluster D seems to be the most lucrative model – Cash cows market : less cash used, more cash generated, least innovative industry – Seamless transition from ASP to CSP model – Sustain competitive advantage to the local market • Cluster A seems to be the least attractive model – Question marks market: more cash used, less cash generated, most innovative industry – Low probability of success : New product, new market, new business unit under conglomerate. • Vulnerable business unit as its revenue is much smaller than other units • It’s better to be exercised as an entrepreneurial model – Severe market competition (IaaS) • Google Drive, One Drive, Dropbox, Box • Price war : extremely price sensitive market 11
- 12. Business Models Review 2/2 • Cluster B, C : no significant impact to the market – Dogs market : less cash used, less cash generated • compete with the common pool of corporate IT spending • Conflict with the existing service offerings • Price sensitive market – Business value : customer intimacy • Consultancy, system integration, solutions deployment – High COGS (Cost of Goods Sold), no leverage to capital market 12
- 13. Business Strategy Recommendations 13 This Page Intentionally Left Blank
- 14. Government Policy Recommendations 14 This Page Intentionally Left Blank
- 15. 15 “When a resource becomes essential to competition but inconsequential to strategy, the risks it creates become more important than the advantages it provides.” Nicholas G. Carr