The barriers for entry on the Cloud will never drop. The Cloud grows more and complex and regional data centers across the globe are impossible for any company without gobs of money to compete with. The margins will drop, but only because the competition between the big 3 has barely even started; even that I believe is a decade away.
The same thing happened with the underlying server/architecture/processor providers. For a while it a vibrant field with multiple competitors and high margins. After a while, competition and differentiation drove down margins.
When the margins drop only the best players will be left. Those players will buy out the competition until there's just 2 or 3 big players who will then ratchet up the prices until they reach a stable equilibrium.
And then another layer gets added to this tasty lasagna:
- Processor
- Architecture
- OS
- VirtualizationService
- CloudProvider
And then we start the process of innovation to margin squeeze again...
The barriers for entry on the Cloud will never drop. The Cloud grows more and complex and regional data centers across the globe are impossible for any company without gobs of money to compete with. The margins will drop, but only because the competition between the big 3 has barely even started; even that I believe is a decade away.