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Case Study

Cloud Wars Go Global: How Amazon, Microsoft, Google and Alibaba Compete in Web Services

This case study was written by Jason Davis, Associate Professor of Entrepreneurship and Family Enterprise, and Anne Yang, Research Associate, both at INSEAD. It is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.

To access INSEAD teaching materials, go to https://publishing.insead.edu/

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03/2020-6577

For the exclusive use of J. Li, 2022.

This document is authorized for use only by Jia ye Li in MIS 441 – Global E-Commerce-1 taught by Richard Johnson, Washington State University from Jan 2022 to Jun 2022.

 

 

 

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“At AWS, we keep a close eye on our competitors, but we are obsessed with our customers…Many large technology vendors are now trying to build a replica of what AWS has been building for the last decade.”

Alex Yung, Managing Director of AWS Greater China 1 (May 4, 2019)

“Amazon, Microsoft, and Alibaba all have different playbooks, but Alibaba is playing the home game in China, which gives them advantages Amazon or Microsoft would never have.”

Evan Zeng, Senior Research Director, Gartner 2 (May 4, 2019)

1. Introduction

Developed around 2006, cloud computing took off to become one of the IT innovations that defined the 2010s, transforming the way computers and software interacted and operated. Defined simply, cloud computing is the delivery of computing services—including servers, storage, databases, networking, software, analytics, and intelligence—from proprietary data centres over the internet (“the cloud”) to offer faster innovation, flexible resources, and economies of scale. The global public cloud market is forecast to grow from US$182.4 billion in 2018 to US$331.2 billion in 2022, a compound annual growth rate of 12.6%.3

By 2020, all the world’s leading digital businesses – from technology content companies like Netflix and Spotify, to innovative start-ups like Rovio and Zynga, to Fortune 500 companies like Colgate- Palmolive and Coca-Cola – had their IT operations running on the cloud. However, many other companies had yet to take advantage. Only one fifth of enterprise applications ran on the cloud – the result of legacy IT systems, slow corporate buy-in, and a lack of understanding of the many advantages it offered –

– First, it lowers the cost of deploying and maintaining IT systems by reducing or eliminating the need for businesses to purchase fixed equipment and build their own data centres.

– Second, these systems are easy to scale as the enterprise grows its ERP, CRM, and other programmes based on their needs. The cloud provider often passes on the economies of scale to customers in the form of lower volume-based pricing. Savings on software, hardware, facilities and maintenance significantly reduce the total cost of ownership (TCO) of IT infrastructure.

– Third, hosting systems, programmes and apps on the cloud provides data-recovery safeguards in an emergency. Disasters can damage equipment and shut down critical IT functions, but cloud systems are safeguarded and thus can support recovery efforts.

– Cloud computing increases mobility and collaboration by enabling team members to work remotely. Although physically apart, they can collaborate seamlessly and receive updates to work-streams in real-time (e.g., when people have to work from home as a result of COVID-19).

1 https://asia.nikkei.com/Business/Companies/Amazon-prepares-to-battle-with-Alibaba-in-Asia-s-Cloud 2 https://asia.nikkei.com/Business/Companies/Amazon-prepares-to-battle-with-Alibaba-in-Asia-s-Cloud 3 https://www.cio.com/article/3397054/the-state-of-Cloud-computing-in-southeast-asia.html

For the exclusive use of J. Li, 2022.

This document is authorized for use only by Jia ye Li in MIS 441 – Global E-Commerce-1 taught by Richard Johnson, Washington State University from Jan 2022 to Jun 2022.

 

com/article/3397054/the-state-of-cloud-computing-in-southeast-asia.html” target=”_blank” rel=”nofollow noopener”>https://www.cio.com/article/3397054/the-state-of-cloud-computing-in-southeast-asia.html

 

 

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– Finally, the cloud gives access to the latest technologies and greater security at a lower initial cost as most apps and programmes come with flexible, subscription-based options. Beyond the cost savings, this enables companies to build apps, build solutions, and do analysis that would otherwise be impossible.

Cloud computing had thus evolved into an ‘enabler’ – a building-block of the digital economy. In addition to supplying the infrastructure for on-demand access to corporate data storage and computing power, it was the basis of new ‘ecosystems’ that enabled the digital transformation of industries and the creation of new products and services.

One-stop, plug-and-play cloud service providers such as Amazon Web Services (AWS), Google Cloud Platform (GCP) and Microsoft Azure appealed strongly to organizations that had product/service offerings with pay-per-use, could be scaled up or down based on usage, and were characterised by resiliency and self-service. To stay ahead of the competition, service providers continuously added functionalities to their cloud offerings that supported new digital-first business models, such as real-time streaming and data-warehousing capabilities.

2. The Race to the Cloud

Cloud computing took off with the creation of AWS and the introduction of its Elastic Compute Cloud (EC2) in 2006. Microsoft launched Microsoft Azure in 2010. Google Cloud Platform (GCP) was released in 2013. AWS, the early winner, dominated market share since the birth of the industry (see Figure 1).

Figure 1: Comparison of Growth of Top 3 Players

Source: Jefferies, company reports

Despite the benefits, many businesses, particularly in traditional industries, had yet to make the leap. A McKinsey survey revealed a gap between IT leaders that had migrated most of their

For the exclusive use of J. Li, 2022.

This document is authorized for use only by Jia ye Li in MIS 441 – Global E-Commerce-1 taught by Richard Johnson, Washington State University from Jan 2022 to Jun 2022.

 

 

 

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