#Cloud is winners take đ all business. Thatâs why if youâre a SaaS product, it's essential to consider listing on major cloud #marketplace (s). Wait, but what about competition?
The rule of the game is co-opetition, because big cloud providers are becoming virtually unbeatable due to:
đ Economy of scale
Once they incur huge CapEx of building the infrastructure, the cost for each unit of compute and storage declines as volume and utilization grows.
Greater scale and innovation lead to rapid quality-adjusted price declines: 7 % per year for compute, 12 % for database, and 17% for storage.
Amazon Web Services (AWS) is making 100+ price reductions per year, while providers outside the top 10 are consistently losing share.
As a result software providers are building on the infrastructure of the cloud provider with the most users. The potential sales market is greatest. This attracts more users to the cloud too. Think OpenAI AI partnering with Microsoft.
đ ď¸ Vertical integration of services (from IaaS to PaaS to SaaS)
Interestingly with AWS, Amazon mainly started from the IaaS layer, and expanded subsequently to the SaaS layer. Microsoft has for many years had a strong position on the SaaS layer, including in the market for productivity software (Office packages), and has extended this to the PaaS and IaaS layers
đ Conglomerate effects
Advantages in the infrastructure management, the âengineâ of these cloud services. Google, for example, uses the same infrastructure for GCP as for Google Search, Gmail and YouTube, and Amazon uses AWS infrastructure for Prime Video and Amazon_com, among others.
â => đ¤ Cloud turns competition into co-opetition
There is no way around collaborating with one of these hyperscalers. A few examples from leading companies:
Netflix uses the AWS infrastructure for almost all compute, storage, analytics and recommendations. At the same time, Amazon has its own streaming service, Amazon Prime Video that competes directly with Netflix.
Spotify uses Google Cloud services, while Google also has its own music streaming service, YouTube Music.
đ If youâre a SaaS product, you need to be on the path of collaborating with one (or better several) of these key hyperscalers.
Their current sweet spot is marketplaces that they are determined to grow fast. It increases their TAM and creates #networkeffects
Offering a large variety of (3rd party) services attracts more users, which in turn attracts even more services from third parties and therefore more revenues.
đ So there is an opening...
Sources: Synergy Consulting, Statista my edits.
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