IaaS vendors with Asia focus should specialize

IaaS vendors with Asia focus should specialize

Summary: Fragmented regional market means infrastructure-as-a-service (IaaS) vendors should calibrate services and marketing efforts to meet specific segments' needs and gain market foothold.

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TOPICS: Cloud
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The infrastructure-as-a-service (IaaS) market in Asia is still immature, which offers both opportunities and challenges to vendors, with one industry watcher calling them to focus their marketing efforts on specific customer segments.

Arun Chandrasekaran, research director at Gartner, said the overall IaaS market is growing as more vendors such as Google and Microsoft have ventured into the arena to join the likes of Amazon Web Services (AWS).

In terms of enterprise expenditure on IaaS, North America will account for about half of the global spend by end-2012 which is roughly three times as big as Asia's, Chandrasekaran added. But while North America dominates actual revenues and long-term growth, there are opportunities in the nascent Asian market that service providers should consider tapping.

Companies in the region that utilize IaaS tend to be early adopters and from the small and midsize businesses (SMBs) demographic. This suggests substantial pent-up demand and a propensity to switch to cloud computing, the analyst noted.

Overcoming fragmented region by specializing
Ben Cavender, associate principal at China Market Research (CMR), added the Asian market is "very fragmented" in general, without the presence of any dominant player such as AWS in the United States. So while IaaS service providers could try and gain a foothold in the less-developed markets, such attempts will not be easy since there is no regional uniformity unlike the U.S. market, he explained.

He added it would be difficult to maintain service standards across a large number of networks housed in different geographical areas within Asia, and are subject to different operational standards and regulations.

These challenges mean that to win in the region's IaaS market, companies need not dominate the region but develop specialized capabilities and marketing them to specific customer segments, said Scott Stewart, director at ITNewcom.

Elaborating, Stewart pointed out that the cloud market has broken into several user segments and there should be vendors specializing in catering to these different customer groups. For instance, a startup would have different requirements and expectations than that of a midsized or large enterprise.

This is why to achieve success in the region's IaaS market, vendors will need to be "true to their segments and then set about dominating that segment" by helping customers derive the greatest business value from their IT investments, the director stressed.

"It isn't always about bottom line reductions, but also increasing the top line. If I'm a manufacturing customer, I don't want a provider to market to me a service of three nines; I want a technology partner that is motivated to help me make [my products] faster, cheaper, and sell more," he stated.

To address customers' concerns over security and service reliability, Chandrasekaran also said vendors need to invest in a stable domestic cloud infrastructure and support services which cater to the local market.

Topic: Cloud

Jamie Yap

About Jamie Yap

Jamie writes about technology, business and the most obvious intersection of the two that is software. Other variegated topics include--in one form or other--cloud, Web 2.0, apps, data, analytics, mobile, services, and the three Es: enterprises, executives and entrepreneurs. In a previous life, she was a writer covering a different but equally serious business called show business.

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