What the Electric Car Can Teach Us About the Cloud

Are you, like thousands of others, considering making the switch to an electric vehicle? You may even be in the market for a type of car so new, the industry had to create a new segment – “Luxury Electric.” If that name makes you think of Tesla, you’re in good company. Tesla was founded in 2003 and by 2009, had delivered just 147 vehicles. By October 2015, that number surpassed 90,000 for the Model S alone.

Maybe you’re thinking that you don’t really trust a car from a company not yet old enough to get a Learner’s Permit. Perhaps you’re thinking that something more established would be better for you. After all, BMW turns 100 this year, and there is a shiny new BMW i8 - the “Electric Supercar” - in your dealer’s showroom right now. The i8 starts at $140,000, 25% more costly than Tesla’s flagship, the Model S P85D. After price, your next concern is sure to be range. The i8, while a marvel of engineering in other respects, will make it just 15 miles down the road before switching to its gasoline engine. The Model S, in contrast, has a range of 285 miles on a full charge. 

What can account for such a difference? Buckle in, because this disparity can teach us a lot about today’s cloud services model. 

Auto 2.0

BMW has been thriving in a field where the winners and losers are separated by their ability to design, source, and assemble the 30,000 parts that go into the average passenger vehicle. Together, those 30,000 parts have collectively represented the largest barrier to entry in a market where only one company has more than 15% market share. This market, which has been functioning for 100 years, could be called, “Auto 1.0.” 

Tesla’s unprecedented growth has been due, in large part, to their recognition that they need to compete in a new market - Auto 2.0. By signing partnerships and hiring respected automotive engineers, Tesla has proven that, in Auto 2.0, designing and building the vehicle itself can largely be commoditized, even for luxury brands. In short, BMW’s apparent challenges stem from being a car company trying to make batteries, while Tesla has found success in being a battery company that also makes cars. In the Luxury Electric segment, it seems the differentiating technology is the battery, not the car. Put simply, it’s all about using technology to meet the experience the user expects. 

And so it is with cloud services today. Many public- and private cloud companies have found the factors that were formerly differentiators – network speed, processing power, and storage capacity – have become commoditized. Just as Tesla’s budding empire stands on the shoulders of giants, today’s cloud service providers have found that leveraging best-in-class technologies to provide lots of compute on a fast network is easier than ever before.

If the barrier to entry in cloud services is getting lower every day, how will service providers differentiate themselves? 

The most successful MSPs in the new cloud economy are finding ways to deliver on the original promise of cloud computing – the anytime, anywhere ability for people and machines to access applications, workloads, and the data upon which they rely. They know that service providers can differentiate themselves by leveraging skills and technologies that match the experience with the expectations, and they can avoid the risk of disintermediating themselves from the clients’ relationship with the technology by adding managed services that have complementary value. 

Is your technology partner focused on the theoretical speed of the underlying infrastructure or the real features that can be enabled on your network? I’m interested in hearing your perspective here and on Twitter via @the_CXO