Abstract:
Ever since the concept of the cloud was initially proposed, the cloud has significantly developed and penetrated all aspects of the IT industry. The process of its development attracts many researchers of high-tech products. Therefore, this research aims to use the famous “Technology Adoption Life Cycle” model, which is a classic theory in this field to analyze the history and current situation of the cloud’s development to obtain the future analysis and outlook of cloud computing. This research mainly focuses on the second largest market of cloud services: China. Several case studies of Chinese cloud enterprises are conducted to show Chinese situations. The result is that the cloud can be exactly illustrated in the model. Cloud is in its glory days when corporating with AI, IoT, and big data in the trend of advanced informatization and intelligentization in nearly all industries. Cloud will get immortal together with every informationalized civilization as it is the best basement of all upper applications. There’re still lots of potentials in the cloud. This research also provides an outlook of the bright future of the cloud under the model with some constructive advice on the relevant industries.
Keywords: Clouds, Product development, Market research
I. Introduction
IGH-TECH industries have undeniably become the most active part of our economy and have significantly changed our lives. Due to its high value, many researchers manage to figure out how the industry operates and how high-tech products gain their success or get eliminated[^1].
Cloud here means the on-demand availability of computer system resources, especially data storage (cloud storage) and computing power without direct active management by the user [^2], which is also a kind of high-tech product when served as a kind of service or a variety of products. There’s no doubt that the cloud has been an industry with numerous types of products, but we consider the whole.
The cloud’s appearance significantly cut the cost of IT deployment and maintenance, which enabled large-scale virtualized distributed computing and much higher SLA(Service-level Agreement) performance. The cloud is the solid foundation of the world of information we see today. In the market of cloud computing, there have been three main cloud service segmentation models: IaaS (Infrastructure-as-a-Service), SaaS (Software-as-a-Service), and PaaS (Platform-as-a-Service). These three models correspond to different application fields and scenarios which have their characteristics.
Ⅱ. Basics and background
In 1991, Geoffrey A. Moore put forward the “Technology Adoption Life Cycle” which a sociological model that describes the adoption or acceptance of a new product or innovation according to the demographic and psychological characteristics of defined adopter groups in his book Crossing the Chasm (1991, revised 1999 and 2014) [^3].
The model claims that it is the innovators that bring the herald of a new product, then it is adopted by early adopters in the early market. However, the product must cross the “Chasm”, which is a gap between success and failure caused by consumer behavior and risk-acceptance level to get recognized by the majority. Then come the “Bowling Alley” and “Tornado”, which means the rapid growth of the product’s market. Then, the product meets its “Main Street” stage and is accepted by even the late majority and laggards [^3].
Fig. 1. Market share of a high-tech product in its live cycle under “Technology Adoption Life Cycle”
The model has been subsequently adapted for many areas of technology adoption since the late 20th century.
In this research, the model will be applied to the cloud and mainly on cases in China. Since before the “early market” stage in the global market, there haven’t been commercialized cloud in China; in these parts, examples are not cases in China. Then in the analysis in and after “early market” stages, there will be several case studies of several Chinese cloud enterprises. Additionally, the prospect will also base on situations in China.
Ⅲ. Methods
In this research, some case studies of companies that occupy different status in the market, according to the model, will be given. Then I will carefully map stages of the cloud’s development into the “Technology Adoption Life Cycle” based on the technology maturity level and economic effects of the cloud at that time. Data in this research is mainly collected from academic sources, and the official websites of the enterprises we mentioned here. Finally, a prospect of the cloud based on the model will be provided.
IV. Case Studies
According to the “Technology Adoption Life Cycle” model, there are three kinds of companies in the market: gorillas, chimpanzees, and monkeys. Gorillas are the highest leaders in the market, while chimpanzees are other giants in the market. As for monkeys, they are newcomers or small companies in the field. Each of them has different features and market strategies.^[^1], [^3] Here, we will focus on examples in China.
In recent years, the cloud in China has been excellent with breakthroughs in key core technologies and newly explored application scenarios. The market potential has been continuously released. In 2018, my country’s overall cloud computing market reached 96.28 billion yuan, a growth rate of 39.2%. Among them, the scale of the public cloud market reached 43.7 billion yuan, an increase of 65.2% compared with 2017 [^4]. Fig. 2 shows the pie chart of the comparison in active IP amount(which accurately indicates the number of active users of a cloud host) among the top 5 cloud hosts in China.
Fig. 2. TOP5 active IP of cloud service providers in the Chinese market [^5]
Aliyun occupies more than half of the market, which is a well-deserved “Gorilla.” Tencent cloud is the second largest in the market, which can be considered as “Chimpanzee.” The left companies only have insignificant market shares. And here, I take UCloud, Qiniu Cloud, and LeanCloud as examples.
A. Gorillas: Aliyun
Alibaba Cloud(Aliyun) was established in 2009, and its public cloud service was launched in 2011. Today, Alibaba Cloud has become the world’s third-largest public cloud provider and the first in Asia [^5]. It has become the leader of cloud services in China in both market share and technology level. Initially, Aliyun’s services have covered nearly all aspects of the whole cloud industry and can provide almost all kinds of solutions [^6] and cloud products, as Fig. 3 shows.
Fig. 3. The series of Alibaba Cloud’s services [^7]
Additionally, Aliyun has plenty of core technologies in cloud computing. For example, it helped Alibaba become the first company in China that realize “de-IOE.” Aliyun also has self-developed “Feitian” cloud computing architecture and “Shenlong” elastic bare metal computing, and Aliyun’s founder Jian Wang was elected academician of the Chinese Academy of Engineering in 2019 [^8].
“Technology Adoption Life Cycle” model tells us that such a market pattern is determined by the nature of pragmatism consumers supporting market leaders [^3]. Aliyun joined the competition at the early market stage and seized the initiative. Once pragmatism consumers start to support and purchase products of market leaders, this process is positive feedback. The process can ensure that the market leader obtains the market share that its production capacity can support.
B. Chimpanzees: Tencent Cloud
Tencent Cloud started on Sept. 9, 2013, which is later than Aliyun. It has completed the basic coverage of the entire chain of cloud products and the construction of the cloud ecosystem of the cloud market [^9] with its unique advantages: the entrance of social software and trump card: negotiation with WeChat Mini Apps [^10].
The “Technology Adoption Life Cycle” model tells us that no matter how dominant the “gorilla” is, it cannot eat all the markets [^3]. Tencent Cloud and Baidu Cloud are two vivid examples. They are in the “Chimpanzee” position in the market, but they may have unique advantages. They usually treat customers kindlier at a lower price. They still have the potential of becoming gorillas, and they are endeavoring to achieve this.
C. Monkeys: UCloud and Qiniu Cloud
“Technology Adoption Life Cycle” model suggests that “monkey” enters the market in the tornado storm. They do not need to educate the market and customers, but it may be hard to compete with giants that have scale merits [^3]. However, the actual situation will be slightly different. Their best strategy is:
1) Clone the gorilla’s products, sell cheaper.
As small companies, lower prices and higher cost performance can be the simplest way in the competition. Copying the giant’s product can let clients trust you more efficiently and more willing to migrate their business to you. However, this method may not always work.
Ucloud is the largest neutral cloud host(except telecom operators) in China, founded in 2012 [^11]. Similar to Linode in the US, it is a small and beautiful company. It cannot cover as many divisions as the giants do, but it still has its way of operating.
2) Make differences and discover new subdivisions.
These companies specialize in specific things in specific industries, to give full play to their unique strengths, to deeply cultivate market segments. Here we take Qiniu Cloud as an example.
Qiniu Cloud chooses a differentiated route. It considers data intelligence and visual intelligence as its core. It launched a CDN, object storage, cloud host, big data, and content recognition platform around massive data and rich media scenarios in various industries [^12]. The intelligent video cloud of the series product combination can provide users with comprehensive cloud computing services. Qiniu’s technical accumulation is quite profound: In September 2017, the Qiniu Cloud artificial intelligence team braved the runner-up in the ACMMM LSVC competition. Formerly known as “Qiniu Cloud Artificial Intelligence Laboratory”, Supremind put forward the idea of “the era of reinforced concrete for AI products created by video intelligence in central platform” in IAS(Internet Architecture Summit 2019) [^13].
Things are similar in LeanCloud. The new company innovatively put forward the concept of BaaS(Backend-as-a-Service), which means a complete and mature solution for both the stateless and stateful of backends, can significantly improve the efficiency of developing and deploying [^14]. The company discovered a brand-new subdivision, and hence become the leader there.
Not every company needs to be a big and complete giant, and being a small and beautiful industry leader is also worthy of recognition. That’s how companies like Qiniu seek their survival and development.
Ⅴ. Results
Cloud computing has gone through the new market, crossed the “Chasm”, passed the “Bowling Alley”, experienced the “Tornado”, and now has reached the “Main Street” stage. The following paragraphs will illustrate the process of the cloud’s development from the herald and end with an outlook of the cloud under the “Technology Adoption Life Cycle” model.
A. Herald and Early Market
Fig. 4 shows the timeline of the cloud’s development in and before the early market [^15].
Fig. 4. Timeline of the cloud before the early market
The history of cloud computing can be traced back to as early as 1955. Christopher Strachey officially mentioned the concept of “virtualization” for the first time in a paper he published (Time Sharing in Large Fast Computers) [^16]. Virtualization refers to virtualizing a computer into multiple logical computers, which is the core of cloud computing infrastructure. The mode of diskless nodes and mainframe can be roughly considered as a kind of private cloud. However, it is not based on the modern network we think today and lacks actual virtualization. Tasks simply queue in the machine waiting to be done, and they may easily affect each other.
With the advancement of both hardware and software, virtualization, distributed processing, and parallel computing technology have gradually matured.
After more than forty years of early accumulation, cloud service has ushered in its early market stage. At this point, the cloud service already has three corresponding subdivision models (IasS, SaaS, PasS). A group of companies with cloud computing as their primary business emerged. In March 1999, Salesforce was founded to provide SaaS model cloud services. In 2003, Linode, LLC, was established to provide IaaS services. In 2006, Zimki began to provide end-to-end JavaScript platform for web application development and utility computing, which is quite similar to Cloudflare Workers nowadays. However, in China, due to the poor network condition and low economy, even the adoption of computers is rare, let alone cloud services. The scale of business also can’t benefit a lot from cloud structure.
The pioneers who are positive and visionary about this new technology of cloud computing have become the first sellers and consumers of the cloud. However, many of them failed, and some of them become average students in the classroom.
B. Early Majority and the Chasm
2006 is a critical node for the cloud because it is the time when cloud computing companies seek a foothold in the mass market. This year, Google first proposed the concept of “Cloud Computing”. Meanwhile, Amazon introduced “Elastic Cloud Computing Services”, and at the same time, launched the IaaS service platform AWS, providing EC2, which announced the advent of the era of cloud computing [^16].
At this time, the concept of the cloud was still unfamiliar to the majority, but the giants, together with their ecology mentioned above, become the early majority due to the rapid growth of their business. Here the story of Netflix should not be absent, which abandoned its infrastructure and migrate all of its business into AWS [^17].
However, things don’t go that smoothly. How can people trust a fully virtualized server to hold all their valuable data and business logic in a third-party organization’s machine with immature technologies? Such accidents happened. Up to now, there have been several accidents in Chinese cloud giants. [^18], [^19]. Data lost due to cloud supplier’s errors or accidents can be vital to the data owner. Nowadays, these risks are much lower but still exists.
When we look back to 2010, Wang Jian, the founder of Alibaba Cloud, tried to realize his cloud concept and encountered high resistance inside Alibaba Group [^20]. However, we can see that nowadays, Aliyun(Alibaba Cloud) has gained huge success in the case study mentioned above.
As a matter of fact, it is the best practice of the giants that encourage the whole industry to upgrade to the era of the cloud. Things are similar in China. Many competitors that joined the market in this period became later “Gorillas” and “Chimpanzees.”
C. Tornado and Mainstreet
Enterprises explore market demands and try to produce complete products to meet consumers’ needs for cloud services. Cloud services gradually cross the chasm and enter the bowling lane stage. Cloud can boost informationalization, automation, and intelligentization. In the world, lots of traditional IT enterprises began to achieve the transformation to the era of cloud, like Microsoft, IBM, UFIDA, etc. together with lots of newcomers like Vultr, DigitalOcean, and Huawei. This period is just what called “Tornado.” That’s what we see in Fig. 5. Globally, the cloud is still rapidly growing.
Fig. 5. The scale of the global cloud market and growth rate [^21]
Nowadays, the cloud is currently in the “Main Street” stages, as the cloud has become the most common foundation of nearly all of our IT infrastructures. 90% of companies use some cloud service, while 74% of tech chief financial officers agreed that the most substantial impact on their business in 2017 is from the cloud. What’s more, 83% of enterprise workloads will be on the cloud by 2020 [^22]. As a matter of fact, nearly all apps or websites we use now are based on cloud, and using cloud technology can be one of the selling points of an application, which means that the late majority has accepted the cloud. Nowadays, the cost of building a website or app based on the cloud can be meager.
In China, the cloud adoption rate is much lower than that of Europe and the US. However, China has already owned nearly all kinds of cloud services and applications, together with immense market value. In 2018, the cloud platform adoption rate of Chinese enterprises was only 43.9% [^21].
The hotspot of the cloud has transitted from only IT enterprises to nearly all industries, even the “laggards.” Fig. 5 shows that SAAS has already occupied more than half of the total market value of the cloud industry, which means that cloud services for other sectors have become the majority. Fig 6 shows that there has been a complete SAAS ecology for nearly all kinds of needs, while ToB services take over half of the market share. Almost all types of industry clouds have appeared in China: finance cloud, energy cloud, government cloud, transportation cloud, etc. [^4]. Moreover, the Chinese government manages to introduce more cloud services to achieve industry transformation and upgrading by many new policies [^21]. Chinese cloud enterprises are also making use of these policies and chasing the trend of AI, big data, and IoT to achieve further development [^4].
Fig. 6. The proportion of global SaaS service segment market [^21]
D. After the “Mainstreet”?
Nowadays, the cloud still has a fantastic growth rate, with the latest trend of AI, big data, and IoT, especially in the Chinese market. However, the market share will gradually get close to or even reach 100% (just like Windows systems), what will happen then? The golden rule “Stop Trying to Reinvent the Wheel” still works.
There’s no doubt that the cloud’s appearance is a kind of discontinuous invention and dramatically changes the world; however, the concepts of distribution and virtualization still hold in the development of the cloud. There may be numerous continuous innovation and improvement in the cloud, but they won’t replace the cloud. The fate of the cloud will like the wheels. Cloud has rooted deeply in the IT industry’s depth, just like the wheels in our machines and vehicles. Wheels have significantly been developed ever since its appearance; however, wheels are still round up to now and obviously won’t get eliminated forever. In a word, their existence remains.
ⅤI. Conclusions
A. The Model Perfectly Suits the Cloud
According to the analysis above, we can see that the development of the cloud can perfectly suit the “Technology Adoption Life Cycle” model, as nearly all parts of the theory can be mapped to specific stages of the cloud, and the trend of the cloud also suits the model well.
B. Outlook and Prospect of the Cloud
The cloud will grow with the latest trend of AI, big data, and IoT in every informationalized civilization. The development of the cloud will be full of diversities with millions of new possibilities, as everything can be on the cloud. Cloud services will also have more diversity: new nouns constantly spring up like FaaS(Function-as-a-Service), BaaS(Backend-as-a-service, for example, LeanCloud), other kinds of “aaS” s, etc. as more and more subdivisions are discovered. Where there is a demand, there is a kind of cloud service. The cloud industry still has plenty of potentials, and the upper bound is exceptionally high. Before all traditional industries achieve full informationalization, there will always be rapid growth in the cloud industry.
C. Some Suggestions
1) Build Robuster Infrastructure for Upcoming Tremendous Data Flow
For cloud service providers, investments must be made in better infrastructure operation and maintenance. Data flow can be tremendous in the era of 5G, IoT, AI, and big data. For example, Alibaba claims that it had processed 970PB of data in “double eleven” in 2019 [^23]. Cloud services suppliers and infrastructure manufactures should make more preparation in both software and hardware.
Additionally, the reason why some users with special requirements don’t adopt the cloud is worries that cloud service facilities cannot meet the needs of high privacy security or top network connectivity. In this regard, cloud service providers should:
a) Adopt more robust privacy policies as well as information encryption technologies;
b) Adopt higher-strength network security policies by formulating effective and complete emergency measures to ensure smooth network;
c) User data adopts specific multiple backup strategies to ensure data security;
There are many other technologies [^24] for security and robust improvement, but they can be omitted here.
2) Deeply Integrate Infrastructures with Upper-layer Applications
The concept of virtualization has proved that how well application runs is what matters. Consequently, infrastructure should be specially optimized for various application scenarios, and cloud services should be more flexible and adjustable for better performance to enhance connection with upper applications.
3) Paying More Attention to Upgrading Other Industries
The core of the IT industry is empowering and raising efficiency， as the IT industry itself doesn’t provide actual value. All IT organizations’ success must give credit to the industry that gains higher efficiency and abilities due to IT technologies. Consequently, to discover the new market and boost the whole economy, cloud service suppliers should forwardly learn about other industries, and organizations in different sectors should manage to find solutions to how to apply cloud in specific application scenarios.
Acknowledgment
The inspiration for this research rooted in the course “High-tech Products Exploration” by A/Prof. Dong Shao in Software Institue of Nanjing University, which benefited me a lot. I am grateful to A/Prof. Dong Shao who guide me in the course. I also have to show my sincere gratitude to Guohao Feng, Yichao Chen, and Shunchao Zhou, who cooperate with me to complete the final essay of the course.
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First A. Dongjun Yu was born in Jiangmen, Guangdong, PRC, in 2001. He is receiving undergraduate education in software engineering from Nanjing, Jiangsu, 210000 PRC since 2019.
Ever since 2015, he began using cloud products and services like Aliyun’s ECS and OSS, which were intended for a private Minecraft server. Since 2016, he has become the leader of ABN-Team, a unified Minecraft & tech team. After four year’s development, he has built a server cluster for the team’s Minecraft servers, websites, and blogs. He has gained some experience in cloud-originated architecture design and team managing.
