Should 'Made in America' apply to cloud providers?

As commoditization creates more competition in the public cloud, U.S. companies may have to choose between buying American and lower prices

Should 'Made in America' apply to cloud providers?

Let’s start by acknowledging the elephant in the room: The top three public cloud computing providers are all U.S.-based, so enterprises in the United States, and even in most other countries, are facing a natural U.S.-based monopoly on public cloud computing technology. So, there is a de facto “buy American” cloud provider policy due to the fact that you really can’t do anything else right now.   

However, a few evolutions are taking place. First, the rise of cloud providers in China and some European countries has some thinking that commoditization of the public cloud space could open up the U.S. market to public cloud providers based outside the United States. Second, the globalization of enterprises means that many U.S.-based companies have more assets and employees outside of the United States than within. 

Enterprises will face a dilemma at some point as public cloud computing becomes a commodity and better prices could come from public clouds based outside the United States. Keep in mind that all public cloud providers will have points of presence in most major countries, so the latency argument goes out the window. Moreover, we’re assuming that compliance and security issues are mostly resolved. 

Faced with the rising competition from non-U.S.-based public cloud providers, will U.S.-based enterprises still lean towards buying American? While the patriot in me says they should, the realist in me says that U.S.-based enterprises will be driven mostly by price. 

If you can buy cloud storage services from a cloud provider based in China but with a local point of presence, at a savings of $2 million a year, you’re going to follow the discounts. Why? U.S. enterprises, like others around the world, are obligated to return shareholders’ equity as a primary objective. Thus, they buy for price and value, not for nationalistic interests. 

Count on the lawsuits to fly as non-U.S.-based public cloud companies make more inroads in the U.S. market, with “knock off” public cloud services. When things settle, the market will have more competition, both U.S.-based and foreign. Whether that’s a good thing or not is up to interpretation.


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