Cloud Computing: Who Owns the Castles in the Sky? (I)

As the cloud market matures, there's going to be some level of switching costs for customers

Morningstar Equity Analysts 17 November, 2017 | 16:49
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Cloud computing has been a hot topic for years, but most companies are still in the early stages of adoption. As IT workloads shift to the public cloud over the next several years, opportunity abounds for infrastructure- and platform-as-a-service vendors, or IaaS and PaaS, respectively. To learn more about this space, Morningstar Equity Analyst Rodney Nelson, who is specializing in enterprise software to share his views on the cloud market trends.

Many of us are most familiar with software as a service, or SaaS. How do the platform and infrastructure as a service markets relate?

Rodney Nelson: The difference between SaaS and PaaS and IaaS is all about who is managing which part of the software and hardware stacks. With SaaS, a single vender, such as, manages the entire software stack, including the physical server, the database, the operating system, the middleware, the bins, the libraries, and the underlying code for the application itself.

With PaaS and IaaS, the customer has more ability to customize. With IaaS, the only thing that the cloud vendors do is manage the core compute and storage services. They have data centers spread across the globe of homogenous hardware that is providing on-demand compute and storage technologies for companies to build and run software on. The beauty of that is the customer only pays for the amount of compute and storage that it actually uses, whereas in an on-premise environment you have to pay for the cooling, the heating, and so on, 24/7/365.

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