Barriers to EntryThreat by new entrants Threat Level WeightEconomy of Scale 1 15%Product Differentiation 2 15%Capital Requirements 1 15%Switching cost 2 15%Network Effects 2 10%Access to Distribution Channel: 1 50%Cost disadvantages independent of scale 1 10%Government Policy 2 10%Weighted Average: 1.9
Barriers to EntryThreat of New Entry is Low because: Barriers to entry is low•Profitability requires economies of scale•Products are differentiated•Brand names are well-known•Initial capital investment is high•Network Effect influence is high•Consumer switching costs are high•Cost advantages independent of scale is high•Accessing distribution channels is difficult•Location is an issue•Proprietary materials is an issue•Government policy is an issue
Buyer ProfileAccording to a research white paper by Bain & Company, the followingare categories of cloud buyer’s profile ,•12 percent of cloud buyers are price conscious and value cost savings.•22 percent of cloud players are safety conscious and are risk adverse.They see value in cloud but place safety considerations above price.•11 percent of cloud buyers are early adopters that have already moved40% into cloud•11 percent of companies are heterogenous, they use cloud only forsome of their environment in cloud and the rest in their ownenvironment.•44 percent of the remaining companies are potential cloud buyers whoare not yet moved into cloud but slowly considering it.
Buyer ConcentrationBuyerconcentration isMedium High
Level 3 AnalysisThreat to Industry Low Medium HighThreat of substitutes xTreat of new entrants xRivalry among existing firms xBargaining power of suppliers xBargaining power of buyers x
A detailed white paper is available, please contact the author.White paper: Porter analysis of Cloud Computing Industry by Sumaya Shakir