Cloud Computing’s Race to the Bottom

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Amazon Web Services reportedly boasts more than a million active customers, and untold numbers of websites and apps rely on its cloud-computing power to deliver content and serve customers. Despite that massive footprint, however, Amazon executives may be feeling the pressure from Google, which has made a very public show of selling its own cloud services for cheap—a new price restructuring for AWS services, announced this week, could end up saving some customers a lot of money.

Under this streamlining, customers can pay Amazon nothing upfront but commit to pay for a full term of a reserved instance (an option only available for one-year terms); they can pay a portion of the instance up-front, and pay the remainder over one- or three-year terms; or they can pay for an entire term upfront for a better hourly price.

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In theory, that will allow Amazon to compete more effectively against Google cloud pricing, which offers discounts for heavy use. With AWS, you just need to pay upfront in order for the savings to kick in.

Amazon and Google are currently engaged in a prices-and-features war, slashing costs even as they spin up more features for their respective platforms. That pattern, in turn, has forced other cloud providers such as Microsoft to offer more for less in order to simply stay in the running. That’s great for consumers and businesses—who wouldn’t want to pay progressively less for powerful storage and compute? But it also makes it hard for any competitor not as large or well-funded as Amazon or Google to break into the space, which may leave the majority of the cloud market in the hands of a few, well-entrenched entities.

In the short term, growing interest in cloud computing could pay substantial dividends for engineers and developers who can manage the hardware and software that underlies the technology. A recent analysis of the Dice resume database found that Linux, Java/J2EE, SaaS, Python, virtualization, and Hadoop topped employers’ lists of the most-desired skills among candidates for cloud-related jobs.

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3 Responses to “Cloud Computing’s Race to the Bottom”

  1. I have noticed over the past few years that cloud providers can be segmented by “typical” customer base. Large Fortune 500 companies have been trending toward large, incumbent cloud providers such as Amazon, IBM, and AT&T, while SMBs are drawn toward smaller, but equally as effective, cloud service providers such as Windstream, Mindshift, and 8×8. This appears to be working very well so far. Smaller companies do not wish to be a guppy in a pool of big sharks (eg; IBM, Amazon). The larger cloud providers do not wish to even speak with SMBs. I don’t even offer the large cloud providers to my clients who are mostly SMBs. I have the smaller cloud providers compete for the SMB business comparing offers and pricing.

  2. Fred Bosick

    Ultimately, the Cloud hardware will be sited in Russia, staffed by remote Indian technicians, and connected with Chinese networking equipment. And then you’ll see what this “cloud” hoopla is really all about.

  3. Agreed, we’re already seeing this with Azure we are getting calls from various places in South America, which we don’t do business in and we had blocked come to find out Azure is hosted there and we had to unblock and allow access. Seems Microsoft is offering really cheap access and a lot of credits because it’s hosted here.