Three Challenges for On-line Demand Services

The emergence of on-line services such as Uber and Handy and others has ramped up the profile of online demand. It represents an interesting convergence of consumer expectations and technology. 

 

Are these types of services fighting an uphill battle?

 

The Economist thinks perhaps. “There are three reasons for skepticism about their chances. The first is that on-demand companies trying to keep the costs to their clients as low as possible have difficulties training, managing and motivating workers….The second problem is that on-demand companies seem likely to be plagued by regulatory and political problems if they get large enough for people to notice them….The third issue is size. The on-demand model obviously has network effects: the home-help company with the most help on the books has the best chance of providing a handyman at 10:30 sharp. Yet scaling up may be difficult when barriers to entry are low and bonds of loyalty are non-existent.”

 

From The Economist, “There’s an App for that,” January 3, 2015.

Three Layers of the Cloud

We hear about the cloud and cloud computing.  But did you know?…

“The ‘cloud of clouds’ has three distinct layers.  The outer one called ‘software as a service’ (SaaS), includes web-based applications such as Gmail, Google’s e-mail service, and Salesforce.com, which helps firms keep track of their customers….Going one level deeper, there is ‘platform as a service,’ (PaaS), which means an operating system living in the cloud.  Such services allow developers to write applications for the web and mobile devices.  Offered by Google, Salesforce.com and Microsoft, this market is also fairly easy to measure, since there are only a few providers, and their offerings have not really taken off yet….The most interesting layer—the only one that really deserves to be called ‘cloud computing,’ say purists—is infrastructure as a service (IaaS).  IaaS offers basic computing services from number crunching to data storage, which customers can combine to build highly adaptable computer systems.” 

Market leaders are GoGrid, Rackspace and Amazon Web Services.  Amazon is by far the largest, owning about 80 to 90% of the current capacity.  The cloud is estimated by Forrester Research to grow to $56 billion in 2020 from about $1 billion in 2010.           

From Threes, Chapter 8, “Threes in Business and Technology”