Amazon Web Services led the infrastructure-as-a-service category in price cuts in 2013, but rivals also stepped up the race to the bottom, according to Rightscale, a cloud portfolio management company.
Playing with the building blocks of the cloud: Getting IaaS right
In a report, Rightscale tracked pricing changes for infrastructure-as-a-service (IaaS) vendors and compared 2013 to 2012. At a high level, cloud compute prices continue to fall and the race to the bottom is good given most of IaaS spending revolves around compute.
Among the key points:
- Four public cloud providers: AWS, Rackspace, Google and Microsoft's Azure cut prices for compute, storage and networking 25 times in 2013, up from 22 in 2012.
- AWS accounted for 12 price drops in 2013, down from 13 in 2012. Azure, Google and Rackspace combined for 13 price cuts in 2013, up from 9 in 2012.
- Compute prices were cut the most---10 times compared to five times in 2012. Database price cuts were the most rare.
- AWS leads in price reductions, but Azure is reacting to them the most. Azure had 7 price cuts in 2013 compared to AWS' 13. Google and Rackspace had four and two price cuts, respectively.
- Prices for storage fell 32 percent in 2013, up from 20 percent in 2012.
Rightscale noted:
In 2012, the November Storage Wars kicked off when Google reduced prices on storage by 20 percent on November 26. AWS followed with a 24- to 26-percent reduction on November 29, and Google responded the same day with an additional 10-percent reduction on storage. Windows Azure got into the game a week later with a 22-percent reduction in storage prices on December 5. In the space of 11 days, storage prices on 3 major public cloud providers went down by 20 to 30 percent. A couple of months later, in February 2013, Rackspace introduced new tiered pricing for storage that resulted in price reductions of as much as 25 percent.
Overall, Rightscale's report highlights what we already knew---AWS sets the price cutting pace and rivals are matching. What remains to be seen is whether this dynamic persists as Oracle launches IaaS in the summer and IBM via Softlayer and HP become more of an industry force.
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My takeaways:
- Companies that also offer IaaS as well as applications via the cloud will likely use infrastructure as a cheap way to upsell or package larger deals.
- It's unclear whether enterprises will go for IaaS meet platform or application bundles from current vendors or mix and match.
- The price wars will continue and ultimately algorithms will play these cloud providers off each other.
- Google could be more of a cloud force on all fronts, but seems disjointed relative to AWS. Microsoft appears to be the best positioned to go toe-to-toe with AWS.
- Rackspace is selling support over raw price cuts, but could garner more of a following as enterprise customers trade up in terms of support.