It is amazing to see how the velocity of business models is changing the entire cloud landscape. I read an InformationWeek article this morning about Gartner’s Magic Quadrant 2014 for cloud, its winners and losers and how for example Rackspace business model has change drastically the past year or so. Rackspace used to be the poster child in hosting and providing high value services, but now they are forced to look for new market segments besides the more traditional developer market that they have been aiming mostly according to the InformationWeek article.
The price decrease from larger players such as Microsoft, Amazon and many others have forced Rackspace’s of this world to look at their business model and try to figure out what to do to survive in the ever increasing competition. It is not easy, no question about it. What is interesting to me at least from a research perspective is the speed of change that has definitely increased during the past years in software and IT business. If you look at service providers that used to manage internal IT infrastructure environments are now feeling the pressure of enterprises moving to the public cloud, whereby the service provider has to reinvent the business model as well.
Rackspace is not the only one that is feeling the pressure. According to the InformationWeek article, Dimension Data was in the Challenger Quadrant last year and has now been dropped to the Niche Player quadrant in the same way as Rackspace. WMware is listed as a Niche player this year, but Gartner cautions that they are offering services to managers that are responsible for virtualization and these managers are different from the business managers that want to build next generation solutions and these are typically the ones that will use public cloud such as Microsoft Azure. This is exactly what I have seen myself when working with both software vendors and enterprises. Enterprises especially were slow to move to Microsoft Azure, but that has really accelerated and even Gartner has noticed the rise of Microsoft Azure market share. This was also reported by Redmondmag where there are only two leaders in the Magic Quadrant, Amazon Web Services. and Microsoft. What is interesting in the new Magic Quadrant is that there are no challengers at all in the quadrant.
I think specialization is really what organizations such as Rackspace needs to do. All of my web-sites are based on WordPress and I have selected a hosting provider that is specialized in providing WordPress hosting only. WP Engine does WordPress only hosting and their site says exactly what I wanted “Hassle-Free WordPress Hosting“. What this means in real life is that they know WordPress inside out, they apply all of the WordPress fixes and monitor the security, take backups etc. Yes, all of this would be able to do on Microsoft Azure, but I would have to do it myself, but I am not in that business. I much rather have a premium hosting provider that I know is not all over the map and based on my experience, they really know what they are doing. I am running a solution on Microsoft Azure that integrates our Dynamics CRM 2013 Online and SharePoint 2013 Online and I will post another blog entry about this exciting integration case.
What is it that we should learn from this blog entry? The first learning is that nothing stays the same, even if you are a market leader or perceived as market leader. The second learning is that the change has definitely accelerated and this is causing bloodshed for the ones that have been resisting the change. The third and maybe the most positive thing is that the change is also creating new opportunities for entrepreneurs that identify gaps in the current offerings. We need to remember that business will continue, but maybe with new players. That is the name of the game.