Barrier to entry for Public Cloud providers?

Over the last few months, there is a flurry of start-ups coming up in the cloud space. It is interesting how each cloud vendor is trying to differentiate themselves. I will avoid using names of specific providers to be politically correct and also because most offerings are still evolving :-) The common differentiators today in the cloud business are:

• Cost & Elasticity: One of the biggest motivation for customers to transition to the public cloud is to lower costs. It helps minimize risks by using opex instead of capex. Its becoming a level playing field with elasticity, performance, availability as must-have features rather than nice-to-have. Most vendors are keeping their basic infrastructure pricing low, but charging a premium for value-add services such as data backup, archiving, compute instances linked with storage for analytics, etc. Also, elasticity is a function of scale. An analogy is that of an insurance company. With a large customer-base, the transient peak demands of  an individual customers can be "smoothed" over the entire available infrastructure.
• Delivery model: Vendors are playing on the available models. An interesting example is one where customers are guaranteed dedicated access to the resources they are allocated in the cloud. In other words, your resources will not be shared. This offering is being sold as a private cloud in a public cloud (huh). Other delivery models include an in-house private cloud, managed service offering, a hybrid cloud where an in-house private cloud can "burst" into the public cloud.   
• Global Data-centers and data sharing: With enterprises becoming global, this is an obvious one. WAN latencies across continents is not an option for global enterprises (no matter how much you dedup and compress your data)
• Smart Solutions (beyond SaaS): Most cloud vendors are collaborating with ISVs to provide end-to-end solutions for customers, beyond SaaS. This approach comes natural to services companies that develop "patterns" working with customers in different vertical markets.

Barrier to entry for Cloud. To summarize, each of the aspects mentioned above are in fact barriers to entry. I expect to see increased M&A where vendors try to combine forces. The most obvious one is the global data-center model, and there is already interesting tie-ups being announced in emerging markets like India (e.g., Tata Communications announced tie-up with Google; Reliance with Microsoft, etc.).

Surely an exciting time for all of us!