ISVs vs Hyperscalers: Mastering Co-opetition

Navigating the delicate dance 💃 of "coopetition" between #cloud hyperscalers and SaaS companies is vital for their mutual growth. But where does each side win customer loyalty while balancing #partnerships and competition?

🏆 Hyperscalers (Amazon Web Services (AWS), MSFT Azure, Google Cloud) act as both suppliers and distributors for SaaS companies (ISVs).

ISVs rely on hyperscalers' cloud infrastructure to run services that may complement or even compete with the hyperscalers' offerings.

Hyperscalers provide ISVs with a route to market via offering ISVs a platform (e.g. marketplace) through which to sell their services or by offering ISVs access to customers.

But hyperscalers also operate and sell services across all layers of the cloud stack. As such, the hyperscalers can also compete directly with ISVs, offering services at the same layer of the cloud stack.

🎯 Where ISV’s solutions have edge

Customers are willing to pay a premium for best-of-breed solutions. The most successful ISVs differentiate themselves in parts of the cloud stack located further from hyperscalers’ core offerings.

Multi-cloud ISVs can win customers that prefer cloud infrastructure flexibility and avoid over reliance on one cloud vendor.

ISVs are less dependent on scale and can go much more granular into customer use cases and offer more features.

🚀 Where Hyperscalers have an edge:

They have overwhelming advantage of scale. This leads to technological benefits such as AI/ML, making it easier to offer solutions based on large datasets and across multiple tools.

🤝 The current win-win scenario

ISVs increasingly depend on hyperscalers for cloud infrastructure and customer access through their ecosystems. Hyperscalers, in turn, have strong incentives to attract ISVs to expand their range of services, enriching customer experiences and driving usage of their infrastructure.

By leveraging their respective strengths and fostering a cooperative environment, both ISVs and hyperscalers can reap the benefits of this "coopetition."

💡 Still, it’s critical ISVs to ask:

Do hyperscalers view our markets as must-win or distant adjacency bets?

In attractive markets for hyperscalers, how can we create maximum value for customers?

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