How the Cloud Competitive Landscape Will Change

1. Customer acquisition in the early stage erodes profits

Cloud computing is an asset-heavy operation model, which is essentially the leasing of server resources, selling computing power and storage.

The leasing model has a typical scale effect: the more customers, the lower the marginal cost. Therefore, at present, the main profit of cloud computing comes from "using new customers at a low price first, and gradually increasing the price later". When the initial break-even point is passed, it will be close to "laying down and making money",

But before lying down to make money, cloud computing requires huge investment. Cloud vendors need to spend a huge amount of money every year for the purchase of hardware equipment such as servers, leasing and construction of computer rooms, and the transmission of the above-mentioned assets to depreciation and amortization will affect the current profitability of cloud vendors.

2. Non-standard services and capital expenditures are currently unprofitable elements of cloud computing

Huge capital expenditures and endless price wars are the main reasons why it is difficult for cloud computing vendors to make money. However, in order to gain market share and expand customer base, cloud computing vendors have to "involve". Gradually increasing prices have always been a "pain point", so in a competitive environment, this "pain point of high prices" will make price reduction a long-term problem.

At the same time, cloud computing is divided into three parts: IaaS, PaaS, and SaaS. Along the cloud computing industry chain, from IaaS at the bottom layer, PaaS at the middle layer, and SaaS at the upper layer, the versatility of business modules is getting weaker and weaker. At the same time, product differences The ability of chemical pricing is gradually enhanced, and the gross profit margin is gradually improved. The gross profit margin of pure IaaS business is relatively low.

At present, domestic manufacturers do not do enough high-margin parts, and the standardized output is relatively small, which also makes the cloud computing business unprofitable.

3. Follow-up deduction of cloud computing competition pattern

The Internet product model is inseparable from "customer acquisition-retention". From the perspective of customer acquisition, the current competitive advantages are Internet giants with a wide range of potential customers, such as "Alibaba Cloud", "Tencent Cloud" and other companies. Large operators mainly provide basic cloud services. In addition to the close cooperation between China Unicom and Tencent, Tianyi Cloud and Mobile Cloud need more refined operations. In the past, they mainly relied on the advantage of lower prices. In the environment of continuous price reduction, The competitive advantage is not too strong.

Therefore, the constant price war will make:

(1) Weaken cloud computing vendors that are "rich but have low operating efficiency";