How a market leader fails big time: Google versus Amazon in cloud computing
Google is B2B
Google (GOOG) is and has always been in the business of selling services into the business market by providing an online platform for advertising for businesses based upon their search engine system. The operations of Google use a distributed massive computing platform throughout the world. Thus thanks to the B2B business Google has:
- Company names
- Contact details
- Online ad spending indication by company
- Experience in web services.
Amazon is B2C
Amazon (AMZN) started out as an online bookshop and expanded the business by offering more consumer goods.
Due to the consumer business (B2C) Amazon has:
- Contact details of individuals – thus no relation to companies
- Experience for web services mainly as web shop.
Google gets lost in Streetview
The almighty Google
- Is and was the leading computing platform.
- Was well positioned to offer other services for businesses.
Especially compared to a B2C company like Amazon.
Still Google decided to ignore their business customers and started to focus on services related to consumers. The advertising business model of Google made them decide to start initiatives like Google Maps, Google Streetview. The latter requiring huge amounts of storage space. Many of them services with doubtful, yet-to-be-proven or non-existent business model.
At the same time Amazon started their S3 (Simple Service Storage) right into the business market and challenging the computing technology of Google.
As this wasn’t enough, Amazon launched also their EC2 (Elastic Compute Cloud) virtualization platform to complete the offering.
Overnight Amazon defined and conquered the market with affordable pay-as-you-go pricing system. Exactly where one would have expected Google.
As Google had busy with other initiatives like Android (mobile operating system), Streetview, … they responded rather late with their Google App Engine offering. The App Engine offering is much more limited than the Amzon offerings: not only by the languages supported but also for porting existing systems and more flexible.
For further comparison:
- Markus Clems – Cloudy Times
- ZDNet Dion Hinchcliffe – Platform-as-a-Service
- GridGain – Open Cloud Platform
Amazon the bookstore conquers the computing cloud market
The start-up companies were the first to embrace the offering of Amazon Web Services, soon followed by larger enterprises.
Even IBM embraced Amazon Web Services for:
- Delivering IBM’s market leading software to clients and developers.
- Running IBM software (already-purchased by IBM clients) on Amazon EC2.
While Google was shooting pictures of the streets of the world, Amazon took market leadership in the cloud market for SaaS applications and web services.
The company management of Google failed to recognize and to catch a market where they should have become market leader as they had:
- The technology platform
- The technology experience
- The operational experience of running large computer centres
- The B2B market relations
- The B2B marketing experience
- The market esteem for innovation
Still Amazon, without any of the above qualities or recognition, snatched up the market that was not even related to their core business.
These businesses are further apart than if IKEA would sell call services to businesses.
Big marketing and product marketing mistakes can happen in any company: even market leaders do fail big time as they are even more blurred by their own success and their self-satisfaction.
What are your product management mistakes?
