Cloud Computing Business Models Review

1. Taiwan Cloud Computing Business Models
Review
Kenny Huang, Ph.D. 黃勝雄博士
Executive Council Member, APNIC
Member, Board of Directors, Mind Extension
huangksh@gmail.com
2015.Aug.30

2. Research Questions
• What kind of business models exist in the local
market of cloud computing ?
• What is best practice among these models?
• Business strategy recommendations
• Government policy recommendations
2

3. Definition
NIST Cloud Computing
• Service Models
– IaaS : Infrastructure as a Service
– PaaS: Platform as a Service
– SaaS: Software as a Service
• Deployment Models
– Private Cloud : system integration, solution providers
– Community Cloud
– Public Cloud
– Hybrid Cloud
3
Source : NIST

4. Competition Theory
• BCG (Boston Consulting Group) Matrix
– The growth–share matrix
• Five Forces of Competitive Position Model
– Michael Porter
• Is the internet driving competition or market
monopolization
– Justus Haucap
• Two-sided Market
4

5. Taiwan Cloud Computing Companies Highlight
(Selected)
5
Service Models
Deployment
Models
Solution
id Taiwan-based Company SaaS PaaS IaaS Private Public
1 Chunghwa Telecom Co. (中華電: hosting, security, storage) v v v v
2 Taiwan Mobile Co., Ltd (台灣大哥大: hosting, security, storage) v v
3 Far Eastone Telecommunications (遠傳: hosting, security, storage) v v
4 Taiwan Secom Company Ltd.(中興保全中保無限: IoT) v
5 HTC Corporation (宏達電)
6 MiTAC Information Technology Corp. (神通) v
7 Quanta Computer Inc.(廣達) v
8 Advantech Co.Ltd (研華科技) v
9 ASUS Cloud Corporation (華碩: storage) v v v
10 Hope Bay Technologies (和沛科技) v
11 Syscom Computer Co. (凌羣) v
12 Stark Technology Inc. ( 敦陽) v
13 Gamania Digital Entertainment Co., Ltd (遊戲橘子) v v
14 KKBOX Taiwan Co., Ltd. (願境網訊) v v
15 Spring House Entertainment Technology (春水堂) v v
Source : TW Cloud Association; firm websites;

6. Observations and Clustering
A. Public IaaS (online storage especially) is preferred
for telecom operators (id 1,2,3), new cloud service
provider (id 9).
– New product vs. new market
B. PC/Notebook manufacturers (id 6,7,8) develop
customized niche solutions
– Old product (auxiliary features) vs. old market
C. IT companies (id 11,12) introduce new solutions to the
existing clients
– New product vs. old market
D. Application Service providers (id 13,14,15) rebrand
business model (from ASP to CSP)
– No Change
6

7. Constructs and Types of Data
7
Market Share Market Growth Rate
Quantitative Data Quantitative DataType of Data
N/A N/AData Availability
Expert Interviews Expert Interviews
Alternative Research
Method

8. Likert Scale Data Analysis
Market Share vs. Market Growth
Market Share
Mean S.D.
Market Growth Rate
Mean S.D.
Expert A Expert B Expert C Expert A Expert B Expert C
Cluster A 3 1 3 2.3 0.94 4 6 3 4.3 1.25
Cluster B 2 4 3 3.0 0.82 3 2 3 2.7 0.47
Cluster C 2 4 2 2.7 0.94 4 2 3 3.0 0.82
Cluster D 4 5 4 4.3 0.47 2 2 3 2.7 0.47
7 Point Likert Scale : 7: Very High ; 1: Very Low
Cluster A : Public IaaS providers
Cluster B : PC manufacturers
Cluster C : IT and solutions providers
Cluster D : Application Service Providers (ASP)

9. 1
2
3
4
5
6
7
1 2 3 4 5 6 7
MarketGrowthRate
Market Share
Value Proposition of Cloud Business Model
9
A
C
B D
StarsQuestion marks
Cash cowsDogs
Source : BCG

10. Cash Flow Implication
10
Relative Market Share
HighLow
MarketGrowthRate
HighLow
Cash used - - -
Cash generated +++
0
Cash used - - -
Cash generated +
- -
Cash used -
Cash generated +
0
Cash used -
Cash generated +++
++
Cluster A
Cluster B,C Cluster D
Source : Olivier Furrer

11. Business Models Review 1/2
• Cluster D seems to be the most lucrative model
– Cash cows market : less cash used, more cash
generated, least innovative industry
– Seamless transition from ASP to CSP model
– Sustain competitive advantage to the local market
• Cluster A seems to be the least attractive model
– Question marks market: more cash used, less cash
generated, most innovative industry
– Low probability of success : New product, new market,
new business unit under conglomerate.
• Vulnerable business unit as its revenue is much smaller
than other units
• It’s better to be exercised as an entrepreneurial model
– Severe market competition (IaaS)
• Google Drive, One Drive, Dropbox, Box
• Price war : extremely price sensitive market
11

12. Business Models Review 2/2
• Cluster B, C : no significant impact to the
market
– Dogs market : less cash used, less cash generated
• compete with the common pool of corporate IT
spending
• Conflict with the existing service offerings
• Price sensitive market
– Business value : customer intimacy
• Consultancy, system integration, solutions deployment
– High COGS (Cost of Goods Sold), no leverage to
capital market
12

13. Business Strategy Recommendations
13
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14. Government Policy Recommendations
14
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15. 15
“When a resource becomes essential to competition but
inconsequential to strategy, the risks it creates become
more important than the advantages it provides.”
Nicholas G. Carr