Understanding the Viability of Cloud Services: a Consumer Perspective

The cloud service market is highly competitive and IT providers face enormous challenges in developing a sustainable market position. Using a freemium model, many vendors focus on establishing a large customer base quickly. In the long run however, they often lack a strategy to generate revenue streams. Based on a sample of 196 actual users, our study examines how cloud services can become viable, i.e., being self-sustainable on the basis of the user base and revenue streams they generate. Our investigation of four key performance indicators of viable cloud services allows us to create a comprehensive understanding of their drivers and the interrelationships among them. We use the characteristics of cloud services to resolve inconsistencies among previous studies regarding the relationships between customer satisfaction, loyalty, word-of-mouth, and willingness to pay. In contrast to other contexts, we identify loyalty (and not satisfaction) as the major driver of willingness to pay, while satisfaction is sufficient for word-of-mouth. The results indicate that research needs to consider the multidimensional nature of cloud service viability to draw reliable inferences in cloud service scenarios. The key findings are translated into a set of recommendations for cloud providers to compete successfully in this competitive market.