Unknowns Will Beat Biggies In Utility Computing

by CXOtoday Staff    Jul 21, 2004

Since the advent of the Internet, early start-ups have managed to create a unique collection of resources, enabling them to build a virtual powerhouse of sorts. Speculation has been running wild about a Â’hidden agenda’ or a Â’deeper plan’ lurking beneath the seemingly harmless business model offered by online giants like Amazon, eBay, Google, and Yahoo!.

The threat has finally been weighed down with a concrete research study by IDC, which predicts that these unknown future players will either displace or beat traditional IT services companies pursuing a delivery model known as Â’utility computing.’ The outcome of such displacement could significantly alter the landscape of players traditionally branded as “the” IT services companies.

“The combination of newer players and the disruptive nature of utility computing could radically alter not only the landscape of current players known for provisioning IT, and even communications, services, but also the ecosystem of players and the fundamental process of provisioning such services” said David Tapper, director of IT Outsourcing, Utility, and Offshore Services.

“Success will depend on how well the players transform their businesses in such areas as accessing new sets of customers likely to buy these services, ensuring that ecosystem partnerships support Â’cannibalization’ of older services and technologies, and aligning brand with appropriate value chain position,” said Tapper.

The study, entitled, “Disruption From Below: The Emergence of Amazon, eBay, Google, and Yahoo! as On-Demand Service Providers”, explores the viewpoint that IT capacity will increasingly be delivered as an outsourced utility service over the next decade. Along with this view, IDC explores the notion that many Â’on-demand’ services, especially those that can be delivered effectively over networks, will be provided not by established outsourcing or supplier firms, but by a new breed of providers like Amazon, eBay, Google, and Yahoo! that have been built from the ground up to take advantage of the power and scale of the Internet.

This report also highlights some key go-to-market strategies that must be integrated into player business models and provides players that want to compete in the market for provisioning IT, and even communications services with some key competitive guidance.

A free copy of the report is available on IDC’s website.