Cloud services landscape to see huge transformation in Asia: IDC

IDC says it will be "very difficult" for smaller cloud service players to remain in business on the back of the provision of basic services as major cloud service providers (CSPs) in Asia have dropped their prices for core services dramatically as of late March.

“If the smaller CSPs are strong enough with decent customer bases, they will be acquired by larger providers. If not, then they're roadkill. In any case, both of the above will drive consolidation amongst the cloud vendors,” says Chris Morris, AVP, Services Asia Pacific, and Lead Analyst, Cloud Services & Technologies, IDC Asia/Pacific.

Morris explains that Cisco's announcement of its InterCloud partnerships with several major SPs is significant, heralding a need for vertical-specific services.

“With its partners, Cisco will build out cloud services based on its reference architectures for different industries, including transportation and manufacturing. And that will become industry Platform-as-a-Service (PaaS) or iPaaS.”

“With Google getting serious about the enterprise and beginning to capitalise on its huge developer partner ecosystem, the whole partner landscape could get a bit bloody as service providers including Amazon Web Services (AWS), Google, Microsoft, Cisco, Oracle and HP all vie for the same partners.”

IDC notes that the owners of the IP related to a specific industry or business process will be most sought after as their IP will enable valuable apps to be built. With line of business (LOB) managers funding about 50% of the cloud spend, Morris points out that if cloud providers want to generate sales volumes to maintain economies of scale, they would need these business-oriented apps to drive consumption of the basic, low-margin services and trigger growth in adjacent markets.