How You Can Beat Amazon EC2 by Differentiating Your Cloud Service

With the gradual adoption of cloud computing, more companies are coming to the cloud service business. With so many new players in the game, how can you stand out in the competition as a service provider? In a marketplace already dominated by companies like Amazon, do you even have a chance?

Yes, you do! Differentiate.

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I recently read a book, “Differentiate or Die: Survival in Our Era of Killer Competition” by Jack Trout and Steve Rivkin. Although it mainly talks about differentiation ideas in traditional businesses, it does offer good insights that can be applied in the cloud service business as well.

Conventional wisdom

Before we get to cloud services, let us take a look at what Jack and Steve say about differentiation. They first discuss some commonly held misconceptions about differentiating ideas:

  • Quality and Customer Orientation Are Rarely Differentiating Ideas
  • Creativity Is Not a Differentiating Idea
  • Price is Rarely a Differentiating Idea
  • Breadth of Line is a Difficult Way to Differentiate

Then, they listed possible differentiating strategies:

  • Being First is a Differentiating Idea
  • Attribute Ownership is a Way to Differentiate
  • Leadership is a Way to Differentiate
  • Heritage is a Differentiating Idea
  • Market Specialty is a Differentiating Idea
  • Preference is a Differentiating Idea
  • How a Product is Made Can Be a Differentiating Idea
  • Being the Latest Can Be a Differentiating Idea
  • Hotness is a Way to Differentiate
  • Being Different in Different Places
  • Maintaining Your difference

In the end, the authors discussed the possible pitfalls on the way of differentiation:

  • Growth Can Destroy Differentiation
  • Differentiation Often Requires Sacrifice

My Top 7 Differentiation Ideas for the Cloud

While the book provides great insights about differentiation strategies, you want to put these strategies in the context of cloud services. Normally it requires thorough thinking over your business and prioritizing possible strategies accordingly.

Given the nature of cloud services and the current market phase, I would recommend the following as top differentiation ideas:

1. Being First
Just think about Amazon EC2. Being the first gives it a huge advantage in marketing its service. While Amazon has taken the first run at differentiating its service as IaaS, you can always try another “first.” It can be “first” of a particular service, or in a particular country/area. This is especially important while the cloud server market is still in its developing phase.

2. Leadership and Innovation
People like to follow leaders. Being a leader in either technology or a service always gives an advantage. You end up with more media coverage and spend less money. Customers, and revenues, follow.

3. Attribute Ownership
Much as Volvo owns the “safety car” attribute, your cloud service product can own the “security” attribute, for example. There are many other possible attributes for a cloud service, including performance, reliability, choice, ecosystem, and easy management.
Always remember, don’t copy your competitors. Seize the unique attribute that defines your service.

4. Market Specialty
There are many different types of customers from different industries from different geographies. You can target precisely one of these groups say IT outsourcing sector. Your service could host different languages and platforms for that cause. Perhaps you could target the enterprise Java market in Asia.

5. Premium Product Backed Service
Like a limo driver bragging that he drives a BMW instead of a Toyota, you can brag about the premium hardware and software like VMware used in your datacenter. It not only differentiates your service but also offers your customer a reason to pay a premium price.

6. Being the Latest
To keep up with the competition, you have to keep innovating all the time. You don’t want to be pushed by the market and your customers for new services. Instead, lead them.

7. Hotness
I think Apple is a good example of being hot as a technology fashion company. You can learn from what it does.

While differentiating helps you find a position in your marketplace for better marketing your services, in the end you still need to deliver it.

What differentiation strategy do you use in your cloud service offering?

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