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Cloud Computing Platforms – A Race to the Bottom.

Posted by Jon Wallace, CTO of Cloud on April 09, 2013  /   Posted in Cloud Computing, Executive Insights  /  2 comments

Cloud Computing Platforms _A Race to the Bottom

Last Thursday on the Google Developers blog, Marc Cohen  announced that, Google Computing Engine would be available to all customers who sign up for their Gold Support package. And if that weren’t enough, they also offered a 4% reduction on all Compute Engine pricing. This comes shortly after a similar announcement by Amazon where the cost of compute and storage became just a little cheaper. Amazon by far is the market leader in the pay-as-you-go infrastructure, with Rackspace following behind with the constant posturing within pricing. This lead me to wonder if what we are in fact seeing is a race to the bottom.

As a user of cloud computing services what do you care about? The first things that comes to mind is availability, scalability and a few other factors that affect quality of service along with the cost factor.  Organizations will typically first look to make use of the cloud to allow them to do things like burst and offset management, but will only do this if it makes financial sense to their business. In cases in which organizations are capable of providing the same services themselves, they are inevitably cheaper and so in most circumstances they choose to do so.

This Google announcement was interesting for a couple of reasons. Firstly, Google is not really a player right now in the infrastructure as a service space however, they do have an enormous amount of hardware and the means to aggressively move into the space. Like Microsoft with Azure, Google can spin up services quickly using existing assets and they have the ability to rapidly expand their platform if required. With this in mind, what becomes the competition strategy, if not cost?

Amazon offers an array of features for developers including a range of development languages and tools. In 2011, Microsoft realized that languages such as Python and PHP were often chosen by startups, the fastest growing IaaS user base as and such quickly moved to support them. Like most other cloud service providers, Microsoft offers private machines too, giving users in theory the ability to pretty much run anything they want from MySQL databases to Linux. Given these capabilities, when comparing Azure to AWS, tools like Elastic Beanstalk still provide enough of a differentiator outside of attractive pricing?

Cloud computing power continues to become cheaper as does storage and other elements and with this, IaaS providers will constantly be able to reduce their costs. Advancements in virtualization technology continue to allow providers to get more out of their hardware, to the point that a single piece of hardware can provide services to many paying tenants. With all of this taking place, the question is how low these providers are willing to go. If pricing becomes the reason that users choose their platform, can these providers continue to compete with each other?

The next couple of years will be interesting as the clear IaaS leaders evolve and like the AT&T and Verizon’s of the telephone world, become the “only” optimal choices. While having a small number of players is not always good for competition, it does motivate these competitors to offer services at a quality their customers expect. While as a customer of IaaS I can always scale down my usage of cloud and thus pay less, Google can’t exactly decide to trash a thousand physical machines if business slows and thus has different cloud computing business drivers than the rest of us.

As always, I’m interested to hear people’s thoughts.

About Jon Wallace, CTO of Cloud

Jon is a senior executive and technology veteran having worked with some of the largest and most complex technology environments in the world. As Chief Technology Officer for Cloud & Emerging Technologies at AppSense, Jon focuses on creating disruptive strategy and maintains an in-depth view of the industry at large. With the experience of working from the field level to the boardroom Jon brings a unique viewpoint catering for many factors and one which is based on real world experience.

Jon is also the author of insidetheregistry.com and can be found on Twitter here

2 Comments

  1. Pingback: Andrew Karpie » Cloud Computing Platforms – A Race to the Bottom. | AppSense Blog

  2. Alana H. April 20, 2013 6:31 am Reply

    Hi,

    My main gripe with Google as a provider of cloud solutions has to do with the fact that this is a company that is unashamedly involved in data mining. Apparently, their current cloud services actually store your documents indefinitely, giving them the carte blanche to use that information for their commercial interests. For me, cloud computing platforms need to ensure the common customer of optimum security and respect a corporation or individual’s privacy.

    Alana

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