The Sky Is Falling: The Latest Casualty in the Cloud Wars

Business.com / Technology / Last Modified: February 22, 2017

Hewlett-Packard is shutting down its cloud platform as the latest casualty of the cloud wars. What does this tell us about cloud computing?

The cloud wars have claimed another casualty.

While most of the time, the victim is an ambitious startup that just couldn’t gain any traction, in this case, it was a corporate giant whose attempt at providing a public cloud service has proven unsuccessful.

Hewlett-Packard recently announced that they would be shutting down the Helion Public Cloud platform it has run since 2011.Effective as of January 31, 2016, the closing is just the latest in what has been a fiercely competitive battle over public cloud supremacy.

HP’s Infrastructure-as-a-Service (IaaS) offering tried to capitalize on a number of different ideas, but customers didn’t respond in the way the company wanted them to.

The cloud wars will continue, but HP won’t be part of the equation, at least when it comes to the public cloud battlefield.

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Declining Market Share

Perhaps this move shouldn’t come as much of a surprise. The cloud wars are notorious for the type of competition aiming to get just a little bit more of a crowded market.

HP’s market share had been steadily declining for years, even to the point where it was no longer considered to be one of the biggest, more influential players in the game. The more market share it lost, the more likely HP would either have to change strategies or get out of the game completely.

Rumors were already swirling over the spring, and with HP cutting tens of thousands of jobs and splitting the organization into two separate companies (one for their PC and printer business, the other for enterprise technology and services), something had to give. HP’s public cloud was on the chopping block.

Early Warning Signs

Even if HP’s market share hadn’t been declining, many of the signs of failure could be seen early on. HP was relatively late entering the fray in the first place. By the time the corporation set up their public cloud offering and unleashed it on mainstream consumers and businesses, bigger competitors already had a stranglehold on the market.

Amazon (with its Amazon Web Services), Google, and Microsoft were at the top of the heap, and anyone else who wanted to get a bigger piece of the cloud pie would have to scratch and claw for it. That’s not to say it was an impossible task. If offering a unique solution with innovative features, another cloud service could theoretically find a way to compete.

HP’s public cloud, however, didn’t do enough to differentiate itself. The company wanted to offer public cloud computing as part of a larger strategy devoted to the hybrid cloud. Other highlights, such as no vendor lock-in, also failed to capture the attention of customers. In other words, HP’s public cloud was a long shot from the beginning, its late arrival put it at a tremendous disadvantage, and it offered little to help it break out from the pack.

Lessons Learned

There are a number of lessons that can be learned about HP’s unsuccessful attempt to compete in the public cloud market. One of the major ones is that it appears businesses aren’t as concerned about vendor lock-in as previously thought.

HP’s embrace of OpenStack for this purpose was one of the major features they touted, but consumers still gravitated toward other options that required lock-in. Perhaps the inconvenience of getting locked into a contract is overblown or simply one that businesses are willing to deal with in exchange for other features and support.

Another lesson is that competing in the cloud market requires a vast amount of resources and full dedication from the company. Amazon, Google, and Microsoft are unique in that they can expend financial resources in huge amounts while still not relying on their clouds to bring in the majority of their revenue.

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This is by no means HP’s swan song. The move to sever their public cloud also comes with the assurance that their private and managed cloud services will receive more attention. And unlike the public cloud, HP has received high praise for those services and has demonstrated they’re more than capable of being a competitor in that space. That’s not to mention the other products the company puts out. HP will be fine, even without the public cloud. This latest development does put the cloud wars into focus, though, as another competitor succumbs to a highly competitive field.

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