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Thursday, April 1, 2010

Not All Created Equal

In the early days of the Internet, say circa 1996, any company that was involved with the “net” was lumped together into the same generic market with every other company during this modern day gold rush.

It wasn’t unusual to see a Newsweek article about the Internet that included profiles of an infrastructure company such as Cisco, a service-based company such as Ariba and a pure-play web-based company such as eBay, as if they all were pursuing similar business strategies.

And the media wasn’t the only entity that failed to discern the significant differences between these new-breed companies. The big Wall St. investment banks were all too happy to guide any company that had a web site through an IPO. Sand Hill venture capitalists were actually advertising on billboards along Silicon Valley highways that they were offering money to any company with a “good idea.” And millions of small-time investors poured so much money into these unknown brands that many of them had billion dollar valuations based on no revenue at all! Then came the dotcom bust, the market settled down, and natural market segmentation finally became the order of the day.

We are seeing a similar phenomenon taking place today around cloud computing, albeit somewhat less frenzied than the "irrational exuberance" of the dotcom era. You are, however, just as likely to read a Wall Street Journal article today that lumps together radically diverse cloud computing companies just as the example above regarding the Internet.

There are some cloud computing companies pursuing an infrastructure-as-a-service business model while others are taking either a platform-as-a-service or a software-as-a-service approach. Some companies are building private clouds. Some are building public clouds. Some are building hybrid clouds. Some companies are building all three varieties for their customers. Yet all of these companies are currently being tagged with one generic label – cloud computing.

Just as there were numerous strategies for using the Internet to conduct and drive business, there are a plethora of ways the cloud is influencing how businesses, especially in IT, are run today.

At 3Point we realize all cloud computing companies are not cut from the same cloth. We know that each company competes in smaller, segmented markets that address specific customer needs. We realize that the way Microsoft is pursuing the cloud with Azure is dramatically different then the way CA is approaching the market, and that VMWare is coming at cloud computing from a different direction than either of them.

Today, cloud computing is at the height of the Gartner Grouphype cycle.” But cloud computing, just as the Internet before it, is here to stay. Cloud computing will, and in many cases already is, changing the way ALL companies do business, including consumer-brand companies.

Understanding the way the cloud influences your business is key to long-term success as this market evolves. We’d love to hear your story on how the cloud is changing the way you look at your business; and the similarities, or differences, you see between the cloud today and the Internet 15 years ago.

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