Public cloud computing pricing is becoming increasingly competitive

By : |April 1, 2014 0

LONDON, UK: A new report by Tariff Consultancy Ltd (TCL) finds that public cloud computing pricing is becoming increasingly competitive, with price reductions averaging 10 per cent per annum, with private (dedicated) cloud services also seeing a decline in pricing – as new virtualized services with a high degree of automation are being made available even for the SME enterprise.

Cloud computing services are typically being offered on a per hour or a per GB basis for virtualized computing power, storage and bandwidth. Providers are offering services based on a simple hourly rate based on a per GB or per unit of computing power or per defined Computing Instance.

Providers such as Microsoft Azure and Google are reducing their core pricing in order to compete with Amazon EC2, the market leader in public cloud computing with up to five times the computing power of its competitors and revenues of in excess of USD $5 billion per annum – estimated for 2014.

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And the established software providers, including Oracle and IBM, are introducing cloud-based services as an alternative to conventional licenced software, with IBM alone reporting that it provides in excess of 100 SaaS services as of the end of 2013.

The number of cloud service providers are growing, with local providers active in each country market with hosting, telecoms, IT services and software backgrounds all offering cloud services frequently using a white label service from AWS, Microsoft or Google, or developing their own cloud platform from virtualization specialist VMware.

Furthermore, the use of a web-based portal and a high degree of service automation and virtualized software, which enables a high number of options to be included for enterprises allowing for a degree of customization – with SunGard Online for example claiming over 200 cloud computing options that can be assembled from its own web portal.

And hosting providers, including French provider OVH, are offering OVH vCloud as a Service (based on a VMware platform) which can be ordered via a web portal for a fixed monthly fee from USD $968 (including vCPU, RAM and dedicated disk space with capacity of up to 10,000 Virtual Machines (VMs) per user available. Private cloud services are now receiving the same degree of automation and price reduction as public cloud services.

The TCL Pricing the Cloud report highlights the following key cloud pricing trend:

-The dominance of Amazon EC2 public cloud offer worldwide, with a claimed introduction of 100 product revisions (Q4-13) and 40 price changes introduced since launch in 2006.

-The price strategy of Microsoft Azure and Google, which is to shadow Amazon EC2 pricing over time for core components.

– The introduction of different Computing Instances which are available for specific applications – including specific pricing for content services and high density applications.

-The bundling of services, with provider Joyent offering a bundled service with vCPU, RAM, storage and 1GB of outgoing bandwidth services in one price.

-TCL forecasts that the average per hour public cloud computing pricing is set to decline from USD $0.375 per hour (as of March 2014) to an average of USD $0.231 per hour (as of the end of 2019).

And TCL projects that ” global public cloud revenue is to increase by an average of 34 percent per annum for the five year period from the end of 2014 from USD $28.2 billion ” – up to USD $76.3 billion as of the end of 2019.

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