Market Share Strategies for Cloud Computing Providers

Abstract

The cloud computing industry is characterized by a small number of dominant providers and a host of small-to-medium providers. As the demand grows, additional providers are expected to enter the market. The need for 24/7 support and competitive pricing allows established providers to maintain defensible industry positions. This paper examines the impact of adopting growth and equilibrium market share strategies by cloud providers. Capacity planning remains a challenging problem given uncertain growth and demand, and providers seeking to pursue different market share strategies must adopt different tactics. Results from a system dynamics simulation indicate that market share growth can be achieved at the cost of overall revenue. A reactive strategy to maintain market share requires more price manipulation, but results in higher overall income. Simulations are conducted for a variety of economic conditions, with a view to providing cloud service providers broad guidance for cloud capacity building strategies.