Will your local grocery store be selling cloud hosted services next?  This may seem like a silly question but the reality is big companies in many markets like HP, Dell, and major telecom companies have chased the cloud services market spending billions.   The theory is anyone can get in on the cloud services gold rush.

The great Cloud Services gold rush is real – for the last few years major corporations like HP, AT&T, Verizon, TechData, Dell, and many more have spent billions trying to re-tool their tired business models into new trendy cloud-services models.  The unfortunate problem is that they each keep coming up short, and shuttering the doors.  HP announced the end of its cloud services at the end of 2015.  AT&T already handed over full control of it’s managed hosting to IBM and is rumored to be in talks to sell off the $2B in datacenter and hosting assets shortly.  Centurylink one of the nation’s largest telecom companies recently stated they are “considering alternatives to data center ownership” to exit the hosting market.  Telecom power house Windstream sold its datacenter and hosting business in 2015 to exit the market. The list goes on, and in 2016 we are sure to see others strategically and not-so-strategically exit the cloud services and datacenter market place

There is no question as to why every company on earth seems to be trying to get into the cloud services market, the perception of great riches and perceived low barrier to entry (people think its as easy as buy or rent some computers and put up your virtual lemonade for sale sign).  But the reason why even the deepest of pockets on earth can’t make those cloud services business profitable and viable at the same time cloud service companies continue to flourish, grow, and show industry and sector growth rates and profitability has major hedge fund managers, investors, and CEO’s scratching their heads as each major player unceremoniously exists the market.

The reason for success (and unfortunately failure) is so simple, it’s literally in the name – Cloud Services, and that is the word SERVICE.   That would be service you can provide only with experience – when its your core product, your core competency and you have you have been doing it for many years with a customer-focused vision to deliver what the client wants.  The word I believe best describes it would be  hubris.   So many big companies thinking they can successfully translate selling or delivering groceries, cd’s, software, desktop pc’s or computer parts into a cloud infrastructure and cloud services company comes at a large price tag, billions lost by these companies that are shuttering the doors and pulling the plugs on their cloud services gold rush attempts.

When was the last time you called any of the failed ventures from the company names above to ask for help, or get some good old fashioned customer service?  Customer Service – talking to someone, hand holding a client as they transition to the cloud and genuinely having someone present to answer questions and help is the corner stone to what made the Web Hosting industry successful for key players over the last 20 years to help those players evolve into today’s cloud services companies that remain successful.  When was the last time you called the telephone company for help, how did that go for you?  Exactly – and that’s why customers, revenue and growth flock to where there is genuine customer service.  Service comes with experience of course, and you don’t just become a successful cloud services company over night.

Don’t get me wrong – there is a place for non customer service oriented offerings in the cloud landscape for do-it-your-selfers and through partnering service companies that add on top that layer of a cloud infrastructure offering.  AWS has captured the lion’s share of the market space with that strategy, but that didn’t come over night but evolved over 20 years.

There is a great quote in the 2011 movie Margin Call from actor Jeremy Irons that sums it up – “there are three ways to make a living in this business: be first, be smarter, or cheat.”  And I don’t think you are going to see any of these pc makers, or telephone companies accused of cheating their way to the top of the cloud services race while they fight over each other to sell off and unplug their cloud business units in the next few years.  The cloud service companies that have been around and made the right investments long ago in people, infrastructure, and culture will continue to succeed by delivering and focusing on what customers want.  Those that try to jump into the cloud services gold rush hopefully have the right core competency’s and culture to support a cloud services business model.  So next time you are at your grocery store, feel free to ask one of the cashiers or managers if they’ve heard any rumors about their grocery chain expanding into cloud services any time soon.  You might be surprised at the answer.