But there is a Catch-22. While providing a cloud service will indeed conflict with the market and reduce margins in many instances, not providing a cloud service could cause a vendor to lose its market altogether to another provider. Thus, it makes much better sense that vendors focus on providing the most innovative solutions, including the use of lower-cost and lower-margin cloud computing solutions, or end up offering no solutions at all.
For vendors in this situation, my only advice is to embrace the cloud and manage your traditional business the best you can. The market moves where it wants to move.
This article, "Why some vendors regret becoming cloud providers," originally appeared at InfoWorld.com. Read more of David Linthicum's Cloud Computing blog and follow the latest developments in cloud computing at InfoWorld.com.