Cloud Services Competition Heats Up

GoDaddy’s Cloud Debut is a Natural Extension to Its Web-Hosting Business

This week, GoDaddy launched new cloud services similar to Amazon Web Services (AWS). GoDaddy expects to cater to small and medium businesses by selling its new offering to the 10 million customers of its Web-hosting services. It plans to use a pay-as-you-go pricing model, similar to those of AWS and Microsoft’s Azure.

In the public cloud computing model, businesses rent computing, storage and networking capacity, outsourcing a key component of their IT demands. This lets them scale up their operations quickly and without huge capital outlays. After years of investing in their own server farms, software and other networking infrastructure, many companies are recognizing they are better off without the drain of such investments, and instead buy computing and storage capacity like they do electricity and other utilities.

Many consumers already make use of cloud services without being aware of it. Netflix, for example, uses Amazon’s servers to host and stream its video service. Other AWS clients include Airbnb and NASA. Azure, Microsoft’s cloud business, has been able to build on its parent’s strength among enterprise customers that include GE Healthcare and NBC News. Google also has aspirations in cloud services and has recently signed Apple as a customer.

Until mid-2015, cloud competitors garnered market share with low prices. As more providers enter this market in 2016, smaller players will struggle to rival the economies of scale and pricing advantages enjoyed by the likes of Amazon, Microsoft and Google. We expect to see more and more niche services, aimed at specific uses and users of cloud services, rather than further price cuts. For example, in early 2016, IBM purchased Ustream, a provider of live video streaming, in a bid to expand its service portfolio.

Although the idea of “the cloud” is still a nebulous concept to many people, it seems to be the direction in which multiple industries are moving. With the world expected to see an explosion of new types of connected device in the next few years, cloud services will have to scale up to keep pace with demand.