Handful Of Monopoly Infrastructure Players – A Shortsighted Idea

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Some commentators in the field of Cloud Computing like to promote the idea that there will be a single (or a handful) monopoly player(s) in the Cloud infrastructure market. The biggest reason quoted to justify this claim is the high cost of building and maintaining the datacenters. The supporters of this school of thought argue that not many companies can afford this level of investment and hence the marketshare will get consolidated with a few big players who can afford. Amazon, Google, Microsoft, etc. are considered to be the players who will compete in this space. I belong to the opposite camp and I believe that the future of Cloud infrastructure is an ecosystem of open, federated Clouds that interoperate with one another. In this post, I will offer my thoughts to justify my argument against the handful of players idea.

Some of my reasons against the possibility of a few player cloud ecosystem are as follows. The first reason has the potential to be controversial and the rest are entirely based on technical and business common sense.

• At the risk of being branded as someone who stereotypes people, I would like to say that this handful of monopoly players thinking is mostly an American thinking. It is a result of the binary thinking that is actively cultivated in US. Having spent the years that shaped my thinking in a country where they play cricket matches for five days and stayed satisfied with a “draw” result, I don’t give too much merit to winning or losing in the marketplace. Having spent the formative years in a very diverse country where there is a political party for every single group, I don’t subscribe to the binary thinking either. It is not either you are “with us” or “against us” for me. It is not either you are a republican or a democrat for me. it is not either you are a capitalist or a communist for me. I believe in the many shades of grey and hence I lack the idea of binary thinking. Having made my thought process clear, my first point is that there is no need to have big winners and big losers in the marketplace. We can have a perfectly normal and competitive business landscape without a single vendor getting the monopoly status. It is not necessary for the marketplace to have a Microsoft with 90% marketshare in the desktop software business or a Google with 80% marketshare in the search business. The landscape will still be capitalistic with many players having smaller percentage of marketshare. Companies investing in the infrastructure business can still be profitable without grabbing the biggest share in the pie.
• The very fact that this world is still divided into many countries and each country has its own regulatory structures is another important reason that goes against the single or handful players idea. Of course, these big players can build datacenters in any country they want. But government regulations, in general, can be really weird and if it involves every single government in the world, I don’t have to explain the complexity of weirdness these handful of players will have to face. Let me be blatantly presumptive here and state that it is just not possible for these handful of players to take care of these regulatory requirements.
• When you make an assumption that only a handful of cloud infrastructure players will exist, you also make another assumption that only a handful of countries exist in this world. Let us go with this assumption and see what emerges from this kind of thinking. When you have only a handful of players, they will only be building the
  infrastructure in those countries where they will get a very good return for their investment. These players are private businesses and not charitable organizations (or government). They have no obligation to spend their money if there is no significant return on their investments. This implies that we will be seeing datacenters built only in a handful of nations. Many countries, may be even one particular continent, will never see any cloud infrastructure built inside of their borders. These countries, which by the way will be significant portion of the world, will never get to take complete advantage of the Cloud technologies due to the regulations in these countries. They will also lose out their chance in getting a good network infrastructure. In short, the “handful of players” school of thought is short sighted and cannot happen.
• Once upon a time, the consumption in the marketplace was mainly from US or from the western world. Now the world is flat and we are seeing consumption from countries from every corner of the world. We are also seeing innovation from countries in every corner of this world. From an era where people used to stand in line for days to get visa to come into US, we are seeing a reverse migration from the US. Not only the consumption has spread across the world, innovation is also springing up from unexpected places. When people in a country get innovative, you will see investments flowing into these countries. Let us not undermine the power of such investments. There will be investors who pump in money to build datacenters in these countries like the recent investment from a Scottish firm.
• The human race has learnt a lesson from the mistakes of the past. They have fully understood the implications of monopoly players in the marketplace. A powerful government is a danger to the freedom of the society and it is the same case with having a single monopoly private player. People have understood the consequences very well after their mistake in the desktop era. They are much more careful now and this “enlightenment” will ensure that there won’t be just a handful of players with a potential to lock-in the customer data inside their infrastructure. As we move from the desktop world to the Cloud based world, we are giving up some control over our data in order to take advantage of the benefits of the Cloud. When we give up the control, we are extra cautious and we want to make sure that no one locks-in our data into their infrastructure. This implies that we will definitely have an ecosystem of Open Clouds.
• Last, but definitely not the least, many infrastructure companies and enterprises have already spent enormous amounts of money in building their infrastructure. They are not going to let their investments go down the drain. They will definitely ensure that there are many infrastructure players in the Cloud ecosystem. Then, there are companies like IBM, Cisco, HP, Dell, etc. who won’t like the idea of having a handful of infrastructure players because it will be detrimental to their businesses. What is the guarantee that these handful of players won’t build their systems on their own like Google or go directly to the manufacturing units in China to procure the hardware needed? Even if they buy through these hardware vendors, what is the guarantee that they will not flock to a single hardware vendor and, thereby, making that vendor a monopoly player? These varied business interests among the many hardware players will definitely keep the Cloud ecosystem federated.

In my opinion, the idea that there will be only a handful of players with near monopoly power is simplistic and shortsighted. The world we live is diverse with varying needs and complex regulations. There is no way these handful of players can deliver the requirements of this world.