More Drama on the Cloud Price Wars Front

Oct 07, 2015 • Business, Data, Marketing
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Perhaps it should come as no surprise that the cloud price wars have flared up once again. After taking a brief hiatus amidst nervous tensions, competition between cloud computing vendors has reached a fever pitch in the past month. The cloud price wars (sometimes known as the “Race to Zero”) aren’t exactly a new phenomenon. For years, cloud competitors have sought to outdo the others by continually slashing prices on their cloud services. Much of the fight has centered around cloud storage, with lower and lower prices seen with surprising regularity. For example, it’s not an uncommon thing to be offered 10GB of storage space for free on the cloud before the price rises. It’s all in an effort to lure people and companies to a particular service, and many experts are wondering how long it can keep going.

The latest volley in the cloud price wars can best be traced to a promotion launched by Google this past summer. As Google released a new cold Nearline Storage service, the mega corporation also held a promotion offering companies 100 petabytes of storage space for free for the first six months. The move was an unprecedented one but definitely business savvy. After all, in order to take advantage of the deal, companies would have to move all of their data to the Google Cloud Platform, and once a cloud provider has a business’s data, it’s much easier to keep them. This Switch and Save program, as coined by Google, also gives the company a chance to show off its other features, essentially wooing other organizations to stay with their services.

Such an aggressive move on the cloud price wars front could not be ignored by the other major players. Amazon Web Services (AWS), the largest cloud provider in the world, responded not long afterwards with another large price cut on its Glacier storage feature. Whereas Google offered their Nearline Storage at $0.01 per gigabyte per month, Amazon announced a 30 percent reduction in their price, putting the amount at $0.007 per gigabyte per month. The massive price cut is only part of the story, however. Google has long had an advantage that allows companies to retrieve data in a short amount of time. With Amazon’s announced price slashing, the online retail giant also introduced a new storage tier that would offer near-instant access to data.

It only took one day for Microsoft to respond, but with prices already so low, Microsoft countered the previous news with the announcement of a new feature. This was tied directly to its Infrastructure-as-a-Service platform with a Linux-based network operating system, all designed to handle increased traffic. The move to embrace more open source options may strike some as unusual, especially coming from a company whose Windows operation system is pushed at every opportunity, but it’s clear that Microsoft is seeking to capture community-developed tools to improve their existing platforms.

One thing to take away from this latest round in the cloud price wars is that it appears a simple price reduction might not be enough these days. As mentioned above, Amazon and Google didn’t just offer lower prices to customers, they had to introduce new features and faster data access. Microsoft didn’t even attempt to compete price-wise with those announcements. Instead, they simply mentioned new capabilities and future improvements that will come from them. Yes, the latest price battles for cloud computing still revolve around cost, but we may have reached a significant turning point. The pricing of cloud storage has gotten so low, the difference may not matter as much depending on the business. Now companies want to know what unique features will allow them to conduct their operations more efficiently.

That’s not to suggest we’re reaching the end of the cloud price wars. That probably won’t happen until cloud storage is free, and there’s lots of debate over whether that’s a realistic goal. But it’s clear that after a bit of a break, cloud competitors are right back at it in their attempts to grab more market share and eventually come out on top. It may be a chaotic time, but customers are the ones who are benefitting the most. | Images via Shutterstock

Alex Espenson

Alex Espenson is a technology writer with a passion for home automation, tech security, and wearable smart devices.

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