This week, we’ve seen staggering price reductions both from Google’s Cloud Platform and Amazon Web Services. With reductions across the board of nearly 50%, Amazon is likely to have just cut their next years revenue from their Web Services division by $500million. That’s not a move anyone would make lightly.
Google hinted at this action by first dropping the price of Google Drive storage to the significant $10/TB/month mark. They then furthered this with dramatic reductions in their cloud computing options.
Amazon retaliated with very significant discounts in the pricing of S3, EC2, RDS and a host of other services. S3 has gone from 8.5c/GB/month to 3c/GB/month (a 65% reduction). Some of our clients have seen their cloud computing bill drop by over five figures a month – in one day’s announcements.
Microsoft’s Azure platform hasn’t come back yet. It’s almost certain that they will. The new CEO of Microsoft, Satya Nadella, won his position on the success he led in the Cloud Services division. This is certain to be a sore point that he won’t want to leave alone. I would be sure that at next week’s BUILD conference in San Francisco significant price cuts are in store for Azure.
Why is this so interesting? Never before have we seen such dramatic reductions in cloud computing pricing. Furthermore, with three technology giants with a combined market capitalisation of over $800bn – more than the economic output of the Netherlands – there is plenty of cash to sustain a drawn out fight to acquire and retain custom.
And this is not before time. For years now stagnant pricing hasn’t matched the progress of technology.
If you were on the fence on migrating your computing workloads to the cloud, it’s essential to revisit this issue. We’re expecting and planning for at least a further 50% reduction in the next 12 months as things continue to heat up. The giants are starting to realise that this is a land grab of a commoditised service. And that’s fantastic news for consumers.
Next time: What Microsoft’s new C# strategy should look like under Nadella.