The “CLOUD”   market is not a market – it’s a construct. The SSP market 10 years ago wasn’t a market either – it was a bad idea. Both had absurd levels of “buzz” which led to absurd levels of VC money being poured in. Both will end the same way – with disillusionment.

The reason the SSP market never was is fairly simple to understand – the premise was fundamentally fawed. The SSP wanted to solve a problem that didn’t really exist.  

Companies were not interested in pushing their critical data assets out the door to be handled by a third party – unless the cost advantage was so stunningly compelling to merit them doing so. Well, turns out it wasn’t cheaper – if anything it was more expensive.  Multi-tenancy wasn’t real nor trusted and as such there was almost zero economic beneft delivered – which destroyed any hope of this market ever becoming legitimate.

There were dozens of SSPs, but not one had a legitimate business model, because there wasn’t a legitimate market opportunity.  They all died.

There are a zillion wanna-be providers of “capacity” services. VCs are pouring money into anything that says Cloud. They will die.  You can’t build a sustainable business selling capacity unless you have a distinct advantage – like you build disk drives or you have a model so vastly superior to everyone else that you dictate the terms (Amazon, for example). It’s going to be hard for even an outrageously well funded start-up to beat EMC, or IBM, or AT&T or Seagate at this game.

Someone will fail soon. Then it will be a snowball effect. VCs will swing to the other end of the pendulum and run and hide from all things Cloud. Companies that have branded themselves Cloud will panic and try to remove the stigma from them. Valuations will plummet.

It is inevitable that this happens again. My advice to those who want to survive the coming collapse is to quickly fnd a legitimate valuable service to offer the market – something they actually need. It’s fne to use “Cloud” as an enabling component to that service – economically or technically – but if you believe that simply being “cloud” is going to provide you sustained value, you are screwed.

You need to change your messaging, and change it quickly. Plus, I hate to tell you this, but it wasn’t working anyway. People don’t buy “clouds” just like they don’t buy “ILM.” They are constructs. They use the constructs, but they don’t buy them as a “product.”

Companies that provide arms and means to leverage the cloud will do fne.  99% of companies that are cloud will not.  You got a great A round valuation by being cloud yesterday, but your B round will be a death march if you are still clinging to that moniker in six months. Use the cloud – don’t be the cloud. Use the cloud to deliver your high value services that everyone needs and you’ll do fne.  Sell “cloud” capacity and you’ll be gone within a year.

Steve Duplessie is the founder of and Senior Analyst at the Enterprise Strategy Group. Recognised worldwide as the leading independent authority on enterprise storage, Steve has also consistently been ranked as one of the most infuential IT analysts. You can track Steve’s blog at http://www.thebiggertruth.com