Consumers are getting more complex in their buying process [20], especially at the information-gathering stage. It seems only the Purple Cow[21] with remarkable products would stand a chance to cut through the noise [23] and reach their target audience. Since 2002, this brought many business owners back to a very fundamental question about Product Differentiation Strategy [22] – “Do we really stand out the way customers want it to be?”.
Fast forward to year 2020, it is estimated that the worldwide revenue of Public Cloud Services may reach USD354.6 billion by 2022 [24]. With this accelerating demand which might be partly caused by the COVID-19 pandemic [26], this market appears to be huge enough to feed different shades of Purple Cows within the same pasture so to speak [25].
Therefore the key issue will be whether, the Purple Cows in the cloud computing market share similar business models shaped by the five forces [22] and macro-environment factors[27]; or do they remain constantly focused on product differentiation to continue their quest to the top, in terms of market share and revenue growth?
The two main Purple Cows in cloud computing – Amazon Web Services (AWS) and Google Cloud (GCP) have been chosen for this paper. The following content will first evaluate AWS’s Business Model using the Business Model Canvas (refer to Appendix A), followed by a SWOT analysis. Lastly, we would then do a general comparison with GCP and analyze its reaction to the competition.
Before diving into the different building blocks within AWS’s business model, it is interesting to note that Jeff Bezos’ letter, as founder and CEO, to shareholders in 2019 ended off with the following phrase:
“Even in these circumstances, it remains Day 1. As always, I attach a copy of our original 1997 letter” [15]
In that original letter, two guiding principles stood out – (1) It’s All About the Long Term and (2) Obsess Over Customers [15]. With these two guiding principles perceived, the Business Model was designed based on secondary research interpreted within the above-presumed context of AWS.
As seen in Appendix A, AWS’s strategies and building blocks resonate with the two principles from Jeff Bezos’ letter in terms of creating sustainable partnerships with customers by making development work and deployment effort as easy as possible. The apparent result of this laser-like focus[33] is arguably the birth of a digital revolution – The Democratization Of Artificial Intelligence, Machine Learning and High-Performance Computing[34]. Like how Singapore’s Trade Minister Chan Chun Sing described embracing new technologies[35], today anyone with an internet connection can leverage top IT technologies in the cloud.
While AWS’s strengths are clearly illustrated using SWOT in Appendix C, evaluating its weakness would probably be even more contextual by looking at how GCP being one of the competitors of AWS, has managed to achieve staggering growth in revenue and increased market share[36].
According to Thomas Kurian, CEO of GCP since January 2019, customers should have autonomy and control over their infrastructure[38]. Therefore on 10 April 2019, GCP launched Anthos – a 100% software-based cloud service that would empower customers to manage AWS and Azure workloads in GCP. This flexibility aims to mitigate customers’ perceived risk of adopting the wrong cloud platforms at the start[39] and impresses upon customers that they can have the “best of all worlds”[42]. In 2020, GCP achieved USD13 billion revenue for a 47% growth year-on-year, but at the expense of USD5.61 billion[37].
GCP’s strategic product differentiation move of launching Anthos is perceived to be (a) capitalizing on AWS’s interoperability weakness and (b) bringing the notion of being Customer-Centric and Democratization Of Technology to a whole new level, has opened up a new beginning in cloud computing and set Google Cloud themselves apart in the new era, but not without a cost. In parallel, GCP Platform continues their market penetration effort by offering free tier packages and chargeable tier rates which are more competitive than AWS’s (refer to Appendix D).
In terms of business model, GCP does not differ too much from AWS’s intrinsically. From having (a) Partners’ Network to (b) charging based on Pay-Per-Use and (c) setting up data centers worldwide, these similarities might have perhaps been shaped by factors like (1) customers’ preferences, (2) competitive market forces or even (3) the established technology standard[43] shaped by AWS as the first mover in 2006, which are now not unique to a single cloud service provider anymore.
One key takeaway from this evaluation therefore might be: to realize that after more than 40 years of technological advancement, Technological Turbulences[40](be it in Cloud Computing or Digital Marketing); Porter’s five forces and generic strategies introduced in 1979 remains a key factor in today’s competition where technology companies are still searching for that Blue Ocean[41] to remain a Purple Cow as the Battle of the Clouds in the 21st Century continues.
APPENDIX A
- Key Partners
AWS launched the AWS Partner Network in 2012[28]. To date, there are at least 178 partnering companies with success stories being published on the AWS website [32].
This network consists of partners and brand advocates who have apparently played a significant role of shaping a technology standard [29] that AWS has achieved, through successful cloud adoptions within different industries using AWS cloud capabilities. This network would have in turn counter and minimize the intensity of rivalry [30] with competitors, through significant gain of higher market share, and higher brand equity created through quality consultancy and implementation work by AWS Certified individuals [11]. These customer experiences could be the impactful touchpoints that have potentially converted customers into AWS’s brand advocates as well [31].
- Key Activities
Based on AWS’s website and their job advertisements on LinkedIn, its primary activities would probably be designing, improving, and maintaining AWS’s cloud services by crafting highly scalable, flexible, and resilient reference cloud architectures that address customer business problems, helping organizations understand best practices around cloud-based solutions, and how to migrate existing workloads to the cloud. These efforts translate to not only modular cloud services for developers and engineers but also ready-made solutions like AWS Quick Starts, Service Catalog that are available to anyone who signs up for an AWS account.
- Key Resources
With physical assets such as approximately 225 edge locations and data centers over the world to provide 99.5% of system availability, AWS hires globally about 798,000 full time and part-time employees consisting of IT Professionals, Data Science Specialists, Marketing Professionals, Supply Chains, HR, Facilities Management Professionals along with a strong Partner Network of more than 178 companies. [5] [6]
- Value Propositions
AWS being obsessed with customers rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking has translated their products into global democratization of Artificial Intelligence, Machine Learning, and Serverless Systems by using Cloud Computing Technologies that comes with Agility, Elasticity, Flexibility, and Security. Enterprises and individuals now have access to the latest AI and ML technology at an affordable price.
- Customer Relationships
AWS was rated the best in a High-Performance Computing User Survey conducted in 2020. [9] Jeff Bezos’ fundamental vision of “We seek to be Earth’s most customer-centric company” has undoubtedly steered how AWS manages its relationship with customers through its Support Center, AWS Marketplace, and Amazon Partners Network.
- Channels
AWS Console Support Center for customers who are already running AWS services, AWS Marketplace for 3rd party developers and customers, ReInvent to launch and promote new inventions or services, Youtube channel to provide bite-size walk-throughs in terms of cloud architectures and IT concepts, Social Media to tell stories about the impact of AWS on employees and stakeholders’ lives, Website to list and describe the cloud services, Amazon Partners Network to create a strong network of quality consultancy services, Training & Certifications to produce certified professionals who will advocate best practices in the cloud deployment.
- Customer Segments
AWS segments its target customers by 16 Industry Categories and 3 Organization Types. These consist of Enterprises, Governments, Startups, and IT Individuals in almost every industry from Retail to Automotive and even Gaming.
- Cost Structure
As shared in AWS’s Annual Report, their costs are classified under “Technology and Content” as it’s a shared infrastructure to serve internal requirements and external sales. These costs include payroll, related expenses into R&D of new products and services, servers, data centers, and network equipment.
- Revenue Streams
The main revenue stream of AWS would probably be from the billable usage hours of various cloud computing services by the respective target customer segments. Cloud Services like EC2 and RDS are the most commonly used by customers while more specialized cloud services like SageMaker for Machine Learning cost substantially higher than typical computing services. All these billable usages are invoiced through the AWS console accounts of each user and client according to their chosen payment mode.
Appendix C
| Amazon Web Services | |
| Strengths | Weaknesses |
| AWS cloud infrastructure costs are shared with the other revenue-making business: e-Commerce. Focus on customers’ needs. First mover advantage in democratizing Artificial Intelligence and Machine Learning.Wide diversified market share in different markets. Easiest and most number of ready-made cloud solutions to deploy. | Too many services, causing confusion even among IT professionals. Much lesser data centers compared to Microsoft Azure.No or low interoperability with other clouds. |
| Threats | Opportunities |
| Rising number of new cloud adopters are choosing Microsoft Azure and Google Cloud.IBM’s superiority in quantum computing technology may cause scientific project owners to switch over from AWS. | Acquire other smaller cloud service providers to enhance their dominance in cloud services. Adopt multi-cloud openness. |
Table C1: SWOT Analysis on AWS
Appendix D
Figure D1: Google Cloud Vision API Pricing
Figure D2: AWS Sagemaker Ground Truth Pricing
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