Migration to the Cloud Ecosystem: Ushering in a New Generation of Platform Competition

19 Pages Posted: 4 Apr 2012  

Chaim Fershtman

Tel Aviv University - Eitan Berglas School of Economics; Tinbergen Institute

Neil Gandal

Berglas School of Economics; Centre for Economic Policy Research (CEPR)

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Date Written: March 2012

Abstract

Cloud computing is defined to be Internet based computing technology, where the term 'cloud' simply means Internet -- and cloud computing refers to services that are accessed directly over the Internet. There are essentially three categories of cloud computing. (i) Iaas (Infrastructure as a Service) -- number crunching, data storage and management services (computer servers), (ii), SaaS (Software as a Service) -- ‘web based’ applications, and (iii) PaaS (Platform as a Service) -- essentially an operating system in the cloud. Much of the attention and literature has focused on the revolution in Iaas services provided via the cloud. Despite the major changes in technology in IaaS services, estimates indicate that more than 90% of the cloud computing market (in terms of revenues) will involve (virtual) operating systems and applications software services (i.e., PaaS and SaaS services.) In this paper, we examine how several key economic factors will likely affect competition in SaaS/PaaS services in the cloud.

Keywords: cloud computing, network effects, platform competition, two-sided markets

JEL Classification: L13, L86

Suggested Citation

Fershtman, Chaim and Gandal, Neil, Migration to the Cloud Ecosystem: Ushering in a New Generation of Platform Competition (March 2012). CEPR Discussion Paper No. DP8907. Available at SSRN: https://ssrn.com/abstract=2034125

Chaim Fershtman (Contact Author)

Tel Aviv University - Eitan Berglas School of Economics ( email )

P.O. Box 39040
Ramat Aviv, Tel Aviv, 69978
Israel
+972 3 640 7167 (Phone)
+972 3 640 9908 (Fax)

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Neil Gandal

Berglas School of Economics ( email )

Tel Aviv University
Tel Aviv 69978
Israel
+972 3 640 9907 (Phone)
+972 3 640 9908 (Fax)

HOME PAGE: http://www.tau.ac.il/~gandal/default.htm

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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