Cloud providers: Squeezing costs or profits? April 8th 2008

Build negotiating power by planning to move utility providers

As an SaaS ISV you can’t build a data centre; CPU cycles must come from utility providers. Amazon’s EC2 cloud computing platform is the current market leader. Microsoft is coming soon; Google and IBM will likely follow.

Relying on one CPU service provider, no matter who it is, is a bad idea. There is a risk a future monopoly provider could lock you in. Running your SaaS applications is a major part of your running costs. If your CPU service provider can lock you there’s a good chance your costs will increase.

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