Saturday, February 17, 2018
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What the public cloud price war means for the enterprise

Earlier this month, AWS announced that they would be reducing their prices. Microsoft followed suit, announcing the following week that they would be permanently cutting prices for their Dv2 compute instances 10% – 17% this February. Microsoft publicly stated with their IaaS release in 2013 their “commitment to match” AWS commodity services. To call this a price war is admittedly a mischaracterization as it is really more of a follow-the-leader strategy. What has proved true is that very few other IaaS providers can compete with these price cuts so the circle of commodity, hyper-scale cloud providers continues to narrow.

With this the 51st such AWS price cut and Azure and Google committed to following suit, the enterprise stands to benefit from this competition. As we discussed with the AWS price cut – reduced prices are good for the growth of the cloud industry in the enterprise. For those enterprises that have adopted public cloud services they can conservatively count on their IT dollar buying 25% more in the next fiscal cycle. In a world in which IT managers must do ever more with a shrinking budget, this economic incentive alone is a tremendous benefit. As an example, do you want to budget a big data infrastructure project next year? No problem, if you are running your enterprise infrastructure on public cloud then the cost will likely be neutral or possibly even less in the coming year even with such an addition. The challenge then becomes personnel that can design, implement and manage the project which is where a partner like Datapipe is valuable.

On the provider’s part, the pricing discussion is often focused on cost per features. Microsoft’s Director of Product Marketing, Nicole Herskowitz aptly explains that the new Azure Dv2 instances – unlike AWS EC2 instances – have load balancing and auto-scaling built in at no additional charge. Microsoft also brags the G-series Azure VMs as the largest VM in the cloud. For a customer swiping their credit card these comparisons are of some use but for the enterprise the total cost of adopting cloud infrastructure does not hinge on point features. An organization must understand the total cloud infrastructure cost plus different enterprise pricing options available on the different platforms such as reserved instances on AWS and Enterprise Agreements (EAs) on Azure. Datapipe navigates these pricing vehicles on both platforms on behalf of customers and demonstrates yet another value proposition that should be top of mind to any enterprise IT manager.

About Todd Smith

Todd Smith
As Datapipe’s former Senior Product Manager, Todd has unique insight into the latest product developments for private, public, and hybrid cloud platforms and a keen understanding of industry trends and their impact on business development. Todd wrote about a variety of topics including security and compliance, business strategy and Microsoft Azure.

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