Global Giants Muscle for Indian Public Cloud Market

Global internet heavyweights are fighting it out on the Indian turf as public cloud grows into a bn dollar opportunity. Where is the market headed and what does it mean for enterprise buyers?

Cloud can do great things, and it is not just about low cost and flexible computing. It can lead to big tussles in the enterprise technology space. While globally tech companies are fighting it out to acquire cloud market share, the Indian public cloud market looks all set for a major battle of its own.

To put things in perspective, the public cloud market in India is on the way to a massive explosion. According to Zinnov, the market is expected to grow over 34% CAGR to be at $3.9 – 4.0 bn market by 2020. There is a strong revolution underway on the enterprise side that is driving the shift to cloud. Once largely used by start-ups with limited funds, today even large organizations are embracing cloud as they overcome their fears of putting data and applications on shared services in their search for better agility.

Not surprising that global giants, especially the two majors in the game, AWS (Amazon Web Services) and Microsoft are in the mid of an intense cloud battle. Although the pricing wars were happening for quite some time now, this is more than just that. This battle is going to be fought on multiple fronts. If all the aggression in terms of competitive marketing, hiring, etc wasn’t enough, Microsoft’s data center launches last year and the more recent announcement from AWS on its new data center regions in India has added more fuel to the flames. Interestingly, the day after AWS made the announcement; Microsoft ran full page ads on its cloud offerings in popular dailies. In the meanwhile, IBM and Google, the other major players in the league are also fast catching up.

The recent top management changes at these companies are also indicative of skirmishes. Few months back Ananthraman Balakrishnan, former India Country Head at EMC Global Services joined AWS. IBM recently hired Kiran Bajwa who was instrumental in spearheading Microsoft’s cloud offerings. If analysts are to be believed, all this is just the beginning. Greyhound Research states in one of its reports, “We believe this is the beginning of the Public Cloud war in India and expect it to become more intense in FY17 and FY18.”

Almost every other technology player is vying for a piece of the cloud market. “Most of big players are actively expanding their footprint in India by establishing data centers to win the confidence of large enterprises including regulated verticals such as BFSI and Telecom. Also, they have a high focus on SMEs and start-ups other than large enterprises,” says, Rajat Kohli, Engagement Manager, Zinnov. These companies are also aggressively hiring cloud experts to ramp up their sales and marketing efforts.

CLOUD VENDORS FLEX MUSCLES

The stakes are very high and cloud companies are not leaving any stone unturned in wooing their Indian clients. Analysts suggest that with the new availability zones, AWS is better positioned to serve Indian enterprises. The benefits could be in terms of lower latency, localized support and data sovereignty. Greyhound’s report also points out, “This new region will lend AWS customers and partners the ability to migrate apps and workloads currently located in other regions.”

AWS has certainly been the pioneer in the field and has its unique advantages that could be hard for its rivals to replicate in a short span. Bikram Bedi, Managing Director, Amazon Internet Services, talks about the company’s USP. “AWS has a lot more functionality than any other infrastructure provider by a large amount.  We have many more services and many more features within those services than any other technology provider. Not only do we have much more functionality by a large amount, but we are also iterating at a faster pace than any other provider.”

Yet as its competitors get more powerful, there is clearly more threat to its dominance in the market. Agatha Poon, Research Director, Cloud & AP, 451 Research points out, “AWS has undoubtedly played a pivotal role in defining the evolving cloud marketplace, but the Internet heavyweight is not the only game in town. Microsoft is catching up fast, especially in India, followed by IBM-SoftLayer. Google is a familiar name in the local business market, but it lacks in mind share when it comes to flexing its muscle in India’s IaaS market. With that said, it is still an established player for its cloud productivity suite,” she said.

Being in the enterprise space for a long time, Microsoft has its distinct strengths. Its deep relationship with Indian enterprises offers it some advantage. Talking about Microsoft’s strengths, Srikanth Karnakota, Director, Server and Cloud Business, Microsoft India says, “Microsoft is the most comprehensive player, even ahead of Amazon (AWS). Because Amazon(AWS) does not have any of the third party cloud services like Office 365 or Dynamic CRM. AWS is still another platform provider at an infrastructure level, while Microsoft is the only player which has coverage in all the three areas, including, IaaS, Paas and SaaS.”

IBM too touts its offerings to be pretty comprehensive. Vivek Malhotra, Cloud Leader, IBM India/ South Asia says, “We have one of the most comprehensive and end-to-end cloud solutions suite, right from bare metal servers via SoftLayer to all in IaaS. IBM is leveraging its huge middleware business as well as our deep understanding of how software platforms work to deliver software in the cloud.”

While rivalry between the global biggies is apparent, local players are also facing the heat and trying to beef up their presence. Kohli reveals, “CtrlS, NetMagic are investing in data centers in the next three to four years as a part of its expansion plans apart from increasing its headcount to meet growing business in India. They are also highly focused on emerging opportunities in the public sector such as smart cities.” Yet industry experts are of the view that when competing with global cloud service companies, they could face challenges in terms of scalability and depth of offerings.

WHAT DOES IT MEAN FOR CIOS AND IT DECISION MAKERS?

Enterprise buyers will benefit from these developments as they will be lured with more innovative offerings and competitive pricing, though analysts suggest that pricing alone won’t be a differentiator anymore. “Perhaps price wars between cloud vendors may entice first-time users, the impact of pricing becomes less pronounced as companies are serious about incorporating cloud-based technologies into their overall IT strategies,” says Poon.

 

We are using public cloud services in our organization.  Being a BFSI we are using the same only for UAT & Pilot running of projects. We can’t put our customers’ data on the public cloud due to regulatory limitations.

In terms of competition, as such I don’t see much in terms of quality, pricing. Everyone has their USP to reach customer requirements. We go through exhaustive POC which help us decide between vendors.  Few of the parameters for vendor selection are Indian pricing, localized servers, Support and transparent escalation

———-Mani Kant Singh R, Head – IT & CISO, Orbis Financial Corporation

CIOs and IT decision makers also should take into account that a single-vendor strategy may not work in the long run. This is especially true since not all players in the market are equally capable to serve the entire gamut – IaaS, PaaS and SaaS. CIOs should spend considerable time in comparing different vendor offerings on various parameters like business compatibility, scalability, security and reliability, as well as the scope for innovation.

IS THERE A WINNER?

Going ahead, competition will further heat up as the growing interest for cloud services attracts more players into the market. “We will see at least 15-20 global cloud companies to enter India market in a big way in the next 12 months,” informs Kohli.

Vendors would also be looking at building vertical specific capabilities and it might lead to some consolidation in the coming years.

New and emerging cloud players looking at building their presence should try and replace generic cloud offerings with innovative solutions that can add to business value.

There will be no single winner in this battle, at least in the short run, as all players play their distinct strengths and customers use a combination of offerings as per their varied requirements. Experts advice that instead of trying to knock each other down, a desirable vendor strategy should be to bring disruptive offerings to the table.

“Vendors’ capabilities to deliver operational imperatives such as security, compliance and domain expertise will set winners apart from followers,” says Poon.

At the end, Cloud has room for all, if only vendors take an innovative path.

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