In public cloud computing fight, the gloves come off

Bernard Golden


The past two weeks brought big news in the public cloud computing market. In the course of four days, three technology giants made bold statements about their intent to be one of the most important public cloud providers — and, indeed, position themselves to be the No. 1 cloud company on the planet.

For anyone using cloud computing, what happened last week indicates how critical the biggest companies in technology view it and how cloud adopters need to evaluate their strategy in light of the ongoing price competition upon which the leaders have embarked.

Here's the high-level overview of what was announced:

  • On Tuesday, March 25, Google announced it was cutting on-demand virtual machine prices by 32 percent. Moreover, it announced what it called sustained-use discounts, in which the on-demand price is progressively lowered once a virtual machine is used for 25 percent of a given month. At full-month use, this discount reduces the cost for a virtual machine a further 30 percent. In addition, Google dropped the price for storage to 2.6 cents per GB per month. Finally, it indicated this was just the first of a series when it stated that its future prices would continue to drop in response to lower costs based on Moore's Law.
  • A day later, Amazon Web Services announced a set of price reductions to EC2 and S3, along with cuts in other service prices. EC2 on-demand costs will go down around 35 percent, with reserved instance prices cut a further 30 percent or so. S3 prices were cut about in half, down to around 2.75 cents per GB/month.
  • Not to be left out, Microsoft announced price cuts intended to match AWS prices. Azure virtual machine prices are down around 35 percent, and blob storage (e.g., S3-like storage) has been reduced 65 percent to around 2.75 cents per GB/month.

Cloud Providers Determined to Demonstrate Their Relevance
As I noted in my last post discussing IDC's 2014 cloud computing predictions, these cuts aligns with IDC's prediction that we can expect ongoing competition among these vendors to ensure they remain one of only several public cloud providers that IDC forecasts will dominate the future public market.

Even more directly, these price cuts align with the last of my 2014 cloud computing predictions: This year would bring a bloodbath of price cuts among the biggest cloud provides as they fight for user adoption.

Simply put, these cuts show just how seriously these three companies view this market. By these actions, each has indicated its view that cloud computing is the next-generation technology platform - and its ambition to be a dominant player in the future of IT.

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