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What does the cloud pricing war mean for business in 2016?

Tamlin Magee | June 24, 2016
Years on and tit-for-tat price reductions of some of the top public cloud vendors are still a hot topic

Several years of fierce, public competition from three of the biggest public cloud vendors - AWS, Microsoft and Google - has established a certain narrative in cloud pricing. But just what is going on with public cloud pricing today, does it quite deserve the importance it's being given, and what does it mean for any CIO worth their strategic salt?

Cloud price cuts: headlines and potshots

This month alone Amazon Web Services (AWS) and Microsoft both slashed their prices. For AWS, it was the company's 51st reduction. Meanwhile, Google rang in the new year with a blog post that opined: "As you can see, we're anywhere from 15 to 41 percent less expensive than AWS for compute resources, after their reduction."

But an argument that's gaining traction is undermining these skirmishes despite the attention they're receiving. It goes that decision makers should not be making judgments that affect their entire organisation based on where prices are right now - and they especially shouldn't bet on where pricing could be in months to come.

The battleground may not just be in pricing, after all, but in offering the right range of services and a willingness to act as a partner, not just as a provider.

"The reality on the ground is something completely different [to the reporting on the price wars]," says Paul Miller, senior analyst for cloud computing at Forrester Research.

"The latest price cuts will generate some headlines - it's a way to lob cheap potshots at the competition, but a CIO from any large organisation is going to be engaging a far richer, far more detailed conversation, and price is a very small part of that."

Selecting a cloud provider is partly down to technical ability, says Miller. "But really, as organisations are looking to drive broader business transformation, you need to be looking for a partner who shares your view of the way you want your business to evolve.

"You need to be selecting a partner that's going to work with you and carry you on that journey, and be with you for the long haul - not a partner you're going to drop next time there's a price cut."

It's not about the money, money

Despite the admittedly entertaining takes on the price wars doing the rounds, one of their supposedly biggest patrons, AWS, agrees that there's so much more to think about.

"It can be difficult to find a true apples-to-apples comparison when it comes to pricing among cloud providers," an AWS spokesperson told Computerworld UK, also pointing us to an AWS whitepaper on pricing.

"There are a number of things CIOs look at when considering which cloud provider is right for them. While cost may not be first and foremost for all of them, it is a consideration - alongside things like reliability, scalability and security.

 

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