How to Succeed with Cloud Services?

Abstract

How can cloud providers be successful? Severe competition and low up-front commitments create enormous challenges for providers of consumer cloud services when attempting to develop a sustainable market position. Emergent trends like consumerization lead to high growth rates and extend the reach of these services far into the enterprise sphere. Using a freemium model, many providers focus on establishing a large customer base quickly but fail to generate revenue streams in the long run. Others charge consumers early but do not reach their growth targets. Based on a representative sample of 596 actual cloud service users, the study examines how consumer cloud services can become self-sustainable on the basis of the user base and revenue streams they generate. The authors identify two mechanisms that influence the success of consumer cloud services, dedication- and constraint-based mechanisms, and show how they drive different elements of success. They find that satisfaction impacts the success of cloud services in terms of user generation and continuance, while switching barriers need to be in place to generate revenues. The results indicate that focusing on a single success element can be misleading and insufficient to understand the success of cloud services. The key findings are used to derive recommendations for three generic strategies that cloud providers can apply to become successful in their competitive market environment.