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Whatever the cost may be: Cloud price war continues

After a relatively quiet year, the race to zero is back. What does it mean for the customer and are there opportunities for the channel?

After a yearlong ceasefire, the piercing sounds of air raid sirens let IT departments around the world know, that the cloud price war was not over. And then the bombing campaigns began.

While wars of yesteryear were fought on the beaches, on the landing grounds, the fields and the streets, the battlefield of this war seems to be the blogosphere.

First up, was Amazon – aka – the establishment. In early January, chief technology evangelist Jeff Barr took to his blog to proclaim that Amazon would reduce prices for its Elastic Compute Cloud instances in the C4, M4 and R3 families by 5%.

“If you are keeping score, this is our 51st price reduction!” Barr proclaimed.

Then came Google – aka – the Noob. Rather than going straight for the price bomb, the search giant decided that a proportionate response would be a few harsh words.

Miles Ward, global head of solutions for Google Cloud Platform, took to his blog[spot] to point out that – even with AWS’ 51 price cuts, GCP was still cheaper than Amazon.

“In case you’ve been reading recent announcements and were wondering, rest assured: Google continues to be the price/performance leader in public cloud,” Ward said. "While price cuts sound appealing on the surface, when you unpack the specifics of Amazon’s pricing model, it can be an unpleasant surprise.”

But this is no binary war. There was one last battalion, yet to reveal its position.   Microsoft – aka – The Window Maker.

On January 14, Nicole Herskowitz, Microsoft’s director of product marketing for Cloud Platforms, announced that the Redmond firm would cut prices on its D-series virtual machines by up to 17%. Herskowitz also deployed a homing missile, aimed directly at Amazon, by pointing out that Azure prices incorporated a range of bundled services not includes with AWS.

Whatever the cost may be

Analysts believe that we may be reaching the nadir of this bloody price war. Tariff Consultancy's 'Pricing the Cloud 2' report estimates that prices will fall another 14% by 2020. However, the general consensus seems to be – at this stage – nobody actually cares who wins; other than the big three and the competitors that are being forced out of the market that is (Rackspace’s share price took a dive, following the price war rhetoric).

The perceived value of public cloud has shifted significantly in the past couple of years. Enterprises are now placing emphasis increasingly on service innovation, not cost.

For the channel, the race to zero is presenting new opportunities. TCL’s research identified a key trend for resellers, systems integrators and telecom providers to become the ‘integrators of multiple cloud services’.

“BT is following the lead of the IT Integrator - including professional service firms CSC and Accenture - who are also partnering with leading cloud providers, particularly AWS, in order to provide cloud migration services and hybrid secure clouds for large enterprises rather than develop their own competing public cloud services,” the report said.



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