The Evolution of Cloud - Assignment Example

Table of Contents Introduction: 3 Literature Review: 4 Cloud Computing: 4 Benefits of Cloud Computing: 5 How the cloud computing works: 6 Company Analysis and Discussion: 9 Porter’s Five Forces Model: 9 Threat of New Entrants: 9 Supplier Power: 10 Threat of Substitutes: 10 Customer Power: 10 Rivalry amongst competitors: 11 Overall Outlook of the Industry: 11 Recommendations for the Company: 11 Recommended Strategy: 11 Market Development: 12 Market Penetration: 12 Cloud Computing and Nintendo: 12 Benefits to Users: 13 Things Nintendo needs to take care of: 14 Conclusion and Recommendations: 15 Conclusion: 15 Recommendations: 15 List of References 17 Introduction: This report discusses the evolution of cloud computing and the developments in this technology. It also talks about the benefits that can accrue to a company if it switches to a cloud computing technology. In addition to this, the report also discusses a case of Nintendo. This case discusses the external environment that is being faced by the company and the benefits that can be materialised by the company and its customers if the company adopts a cloud computing infrastructure. Literature Review: Cloud Computing: With the evolution of internet, new computer architecture emerged. This computer architecture came to be known as cloud computing. Cloud computing allows a user to access his data or even run computer software from a remote data centre via the internet. However the data being accesses or the software being run needs to be present or stored in a cloud, rather than on a personal computer hard drive or a company’s server. This form of computer architecture has allowed many small and medium companies to grow. This has been done by enabling employees to access important corporate data while on the move. This has come as an alternative to costly network infrastructure, which demanded huge capital outlay from small and medium enterprises. It is interesting to know that this technology innovation has emerged from the existing technology landscape. A demonstration of this technological innovation is the hotmail account which uses technology delivered by cloud computing. It provides users with data that is not stored on a personal computer. Experts believe this form of computing to unleash the next great paradigm shift of personal computing. This paradigm shift will transform the traditional mode of computing and open up new opportunities for businesses, consumers, the environment and economic growth (Buyya, Yeo, Venugopal, Broberg, and Brandic, 2009). Benefits of Cloud Computing: There are numerous benefits of cloud computing for instance those countries which are spending exceedingly on information and communications technology; they can use this technology to reduce approximately 20-50 percent of their current cost. By means of this form of computing, users can access their data or run software from virtually anywhere. However they do need an internet connection to make this possible. Cloud computing enables users to run their own applications while using their internet service provider’s servers, operating systems and storage facility. Experts believe that cloud computing has the potential to create up to 240,000 jobs in the short term. In addition to this mode of computing has the potential to create 35, 000 new small and medium enterprises. This form of computing has the ability to adapt to large changes in the demand very quickly, allowing companies to respond quickly and swiftly to consumers. Moreover, this form of computing is by nature environmental friendly. It allows individual businesses to reduce in-house computing demand, thereby, reducing carbon footprints. It is estimated that by using this form of computing large companies can reduce carbon emission per user by at least 30 percent. All this can be achieved by moving some computer application to the cloud. On the other hand small businesses can reduce carbon emission by up to 90 percent. This form of computing has been found to be a lot safer than tradition form of computing. Since cloud computing can only be provided by companies navigating the security risk over the internet, therefore, it is their job to keep data stored on a cloud safe. These companies have a huge commercial incentive to stay updated with the latest security developments and the latest security solutions to respond to the rapidly changing security threats. Experts believe that this form of computing can play a vital role in eliminating inconsistencies in the Digital Single Market and go a long way in eliminating cybercrimes (Buyya, Pandey, and Vecchiola, 2009). The commercial opportunities for sky drive are immense. When properly executed, this form of computing can offer users a great deal of flexibility, portability and choice. Users can run software located on a data centre. In addition to this users can use applications provided by the cloud service provider or they can even choose to develop or run their own applications. But in the second case the users will have to rely on the service provider for his servers, operating systems and storage. There is another option open to the user, he can deploy and run software of his choice while using the infrastructure of the service provider, but retain control over the application, operating system and storage. There is also an option of a private cloud or a public cloud available to the user. The difference between the two options is that the private cloud operates for only one user whereas the public cloud is open to the public. The public cloud can have multiple enterprises, organisations and individuals subscribed to its infrastructure. Users can even choose a hybrid of the two. Although this form of computing is in its early stage of evolution, but experts believe this form of computing to play a vital role in economic development. Experts believe that this mode of computing can go a long way in enhancing the competitiveness of the public and private sectors of the economy. A research firm investigating the potential of cloud computing found that the innovation has the potential to add £ 11 billion in net new business revenue in the United Kingdom economy by 2013 (Pearson, Shen, and Mowbray, 2009). How the cloud computing works: Experts like to refer to cloud computing as a mean by which internet has become a computing platform. This new internet propelled platform allows users access to highly scalable and flexible information technology resources. This new innovation has given consumers and businesses to access software and services. This has allowed a small business to avoid investment in its private server (which can be considerable cash outlay), and instead rent storage space and IT management services from cloud service providers. This service also allows a large company to increase its IT capabilities during those times of the year when demand reaches unprecedented scale (Ekanayake and Fox, 2010). With connectivity and computing power improving in the data centres, it is now possible to move into the cloud very easily. This development will provide impetus for adding new services and applications for both business and consumers. This form of computing will allow business to pay for the technology they need when they need, rather than to invest on laying in-house IT infrastructure demanding upfront cash expenditure. Sometimes companies are made to invest on IT infrastructure just to support seasonal demand. This can become extremely costly for companies at times when the demand for its products or services is low. By using cloud computing, businesses having seasonal need of IT infrastructure can reduce their expenditure and maximise their operating profits (Ekanayake and Fox, 2010). Business can make large savings by moving to cloud computing, just by eliminating upfront capital investment of IT infrastructure and the cost associated with maintenance and servicing of these systems. Companies will be able to avoid the service cost associated with running the IT systems. Using this form of computing a cloud service provider can service the software of a customer in its data centre to ensure that the software is secure and up to data. For businesses, by acquiring these services on a cloud server, tremendous amount of cost saving can be accomplished. This can help these businesses to stand up on their feet to face the crippling environment of recession. Since this environment has made businesses search for innovative methods to reduce operating costs, so this mode of computing can be one such way of reducing operating cost. This cost saving can go a long way in stimulating currently suppressed consumer demand. Businesses after achieve cost reduction targets can transfer this benefit on to the consumers by lowering their product prices. In this way consumers can again be made to start spending (Pearson, Shen, and Mowbray, 2009). Company Analysis and Discussion: The company that the researcher believes can most benefits from cloud computing technology is Nintendo. In this section the researcher will conduct an environmental analysis of the company and recommend ways in which cloud computing technology can fit into the company’s operating scenario. Porter’s Five Forces Model: Threat of New Entrants: This dimension of Porter’s five forces is currently falling on the lower end of the spectrum. The reason behind this is that the environment of recession is discouraging new entrants from entering the marketplace. The environment of recession is making way for the emergence of new social trends. These trends are still very vague, making it difficult to understand them and design a product offering accordingly. As a result of this existing companies are in a fix and for new companies to enter in such a chaotic situation; it would be very difficult to handle the challenges in this situation. Augmenting this hostile business environment is the fact that there is a relative scarcity of quality suppliers, which raises the bargaining power of these suppliers. In addition to this the existing distribution channels are under the influence of existing companies of the industry. And it would be very difficult to change the loyalty of these channel members. Moreover, any company operating in the marketplace needs to come up with exceptional and exclusive gaming features because consumers (video game savvy customers) are demanding extremely high quality of consoles. New entrants need to have a definite and sustainable competitive advantage that could differentiate them from rest of the industry players (Shankar and Bayus, 2002). Supplier Power: This dimension lies on the higher end of the spectrum because there are limited suppliers of quality components in the industry. Companies desiring to purchase quality components have to accept the terms and conditions of quality suppliers. Since the switching cost associated with suppliers is high therefore companies have to build long term relationship with the suppliers. In addition to this, companies operating in this industry have to keep a vigilant on their suppliers so as to prevent them from leaking company’s trade secrets to its competitors (Shah and Haigh, 2005). Threat of Substitutes: This threat can be classified as medium in terms of its magnitude. Although innovation in this industry is occurring at an exponential rate but ground breaking innovation in the form of virtual games is still far ahead. Savvy gamers are demanding new features in their consoles, which is making it difficult for companies to continuously invest in new research and developments (Shah and Haigh, 2005). Customer Power: Since there are many companies operating in the marketplace therefore consumers have lot of options available to them. This also creates low switching cost for consumers. Moreover many companies like Microsoft are offering new games and software through cloud computing technology. This is making it easier for gamers to access latest games and application. The most important variable of this dimension is the environment of recession. This variable is leading consumers to curtail their spending; as a result of this consumers are demanding more value at low price. For companies this has become a challenging situation because the cost of product development does not permit giving out the finished products at a reduced price (Shah and Haigh, 2005). Rivalry amongst competitors: This dimension falls on the higher end of the spectrum. The market of video game consoles consist of companies which have strong capital base to support their operations and most importantly they have a competitive product offering to sustain their existence in the marketplace. No company has been able to triumph the marketplace, since the consumers are extremely disloyal. The companies are searching for additional customer segments and designing product offerings for these new customer segments. The market place is characterised by extreme form of price war. Moreover, companies are also looking for ways by which they can reduce their operating cost (Shah and Haigh, 2005). Overall Outlook of the Industry: The industry can be classified as extremely competitive and sensitive to economic conditions. Companies operating in the marketplace needs to reduce their cost of operations in order to protect their margins. In addition to this these companies need to attract new customer segments towards their product offerings. Companies need to devise a cost efficient way to reach out to these customers (Shah and Haigh, 2005). Recommendations for the Company: Recommended Strategy: Since the above Porter’s Analysis was done keeping in mind “Nintendo”, therefore, it is advised that the company search for a new customer segment to serve. Moreover, the company also needs to devise a method that can take the company’s products closer to the customers. The generic strategies being referred to are market development and market penetration. Market Development: The company by means of its new Wii console can target the following audiences: House wives Grandparents Video game averse people Teenagers To equip these users with new games, gaming applications and software, the company can employ cloud computing. This will enable these consumers to access these games, applications and software in a hassle free manner and a lower cost. Moreover, the company will also be able to reach out to these consumers at a lower cost. Market Penetration: Nintendo can use cloud computing to penetrate its products into its current as well as new market segments. This will lead the company to extract additional revenues from its market segments at a cost that will not erode its profit margins. Cloud Computing and Nintendo: Nintendo, by employing cloud computing technology, can provide its users with a technology platform, using which they can access new games, application and software. The company can use this technology to add gaming skills in to the new customer segment. By introducing games that matches the skill level of the gamer; the company can keep the gamer attracted to the console. This in turn would play a vital role in suppressing gamers’ need for an advance console. This chain of events can play a vital role in company’s aim to reduce its research and development cost and production cost. In addition to this, applications that are serviced through cloud computing requires fewer versions. These applications need require less frequent updates which can be managed by the data centres. This initiative can also go a long way in communicating the company’s desire to protect and safeguard its environment. As mentioned earlier this technology can minimise carbon emission and most important minimises energy consumption by pooling resources into a cloud. This technology infrastructure will allow the company to extend its products to the global marketplace, thereby adding new customers to its current customer base. Global customers can get up close to their peers, who are using the same console. This can go a long way in creating a global community of Nintendo console users. The information being shared between these community members can provide valuable insight to the company and can help the company in designing their future product offerings (Cusumano, 2010). Benefits to Users: The gamer can access huge range of applications without having to download or install them. The gamer can access the applications at any time; in addition to this the gamer can share applications with his peers. The most important impact of this is that the user can avoid expenditure on hardware and software, since the gamer can use what he needs. Gamers can access new software, applications and games while on the move, and thus this technology makes them extremely mobile. By offering this form of computing, the company in essence has empowered its customers. This power cannot be experienced by means of an ordinary personal computer. By providing applications that uses virtual power, cloud computing has enabled customers to automate many tasks such as managing dates and offerings and etch. Things Nintendo needs to take care of: Since users do not have a physical storage of data therefore it would be the responsibility of Nintendo to control the storage of data. Since there is a high probability that users will become dependent on the cloud service therefore the service provider needs to ensure service availability at all times. Since data is held externally in a cloud, the service provider needs to ensure business continuity and disaster recovery. The company needs to make provisions for situations in which they might have to switch cloud service provider. Conclusion and Recommendations: Conclusion: From the above literature review and analysis it can be concluded that cloud computing can provide an additional avenue to businesses, which they can use to reach out to their customers. The technology infrastructure provided by cloud computing plays a vital role in tailoring the operations of a company like Nintendo to fit the operational requirements of its industry. By enabling companies to provide additional value added services to its customers, cloud computing can play a vital role in enhancing customer satisfaction and customer lifetime value for the company. Recommendations: After conducting the analysis of the situation in which Nintendo is currently engulfed in, following strategies have been recommended for the company: Market Penetration: use cloud computing to penetrate into its existing as well as new customer segments. Market Development: the company can offer its newly discovered market segment with software, gaming applications and games via cloud computing. Enabling the company to reduce its operating cost. List of References Buyya, R., Pandey, S., and Vecchiola, C. (2009). ‘Cloudbus toolkit for market oriented cloud computing.’ Cloud Computing, vol. 5931, pp. 24-44. Buyya, R., Yeo, C., Venugopal, S., Broberg, J., and Brandic, I. (2009). ‘Cloud computing and emerging IT platforms: vision, hype, and reality for delivering computing as the 5th utility.’ Future Generation Computer Systems, vol. 25, no. 6, pp. 599-616. Cusumano, M. (2010). ‘Cloud computing and SaaS as new computing platforms.’ Communications of the ACM, vol. 53, no. 4, pp. 27-29. Ekanayake, J., and Fox, G. (2010). ‘High performance parallel computing with clouds and cloud technologies.’ Cloud Computing, vol. 34, no. 1, pp. 20-38. Pearson, S., Shen, Y., and Mowbray, M. (2009). ‘A privacy manager for cloud computing.’ Cloud Computing, vol. 5921, pp. 90-106. Shah, N., and Haigh, C. (2005). The video game industry: an industry analysis, from a VC perspective. Center for Digital Strategies. Shankar, V., and Bayus, B. (2002). ‘Network effects and competition: an empirical analysis of the home video game industry.’ Strategic Management Journal, vol. 24, no. 4, pp. 375-384. Read More