Expect to see more price cuts in the near future and not just for virtual machines.
The cloud pricing battlefield has shifted away from virtual machines as object storage has become the focus of attention for cloud providers.
The good news is that growing market maturity will see prices decrease in other areas away from VMs to other services such as databases over the next 18 months.
That’s according to 451 Research in their latest Cloud Price Index Report, which identified that the prices of services beyond compute had, until recently, held steady despite them being competitive areas. Typically VM pricing had been the traditional battleground but now object storage pricing is declining in every region.
The shift is highlighted by a drop of 14% over the past 12 months, while VM pricing has dropped only 5% over the same time.
Jean Atelsek, Analyst, Digital Economics Unit at 451 Research, said: “The big cloud providers appear to be playing an aggressive game of tit for tat, cutting object storage prices to avoid standing out as expensive.
“This is the first time there has been a big price war outside compute, and it reflects object storage’s move into the mainstream. While price cuts are good news for cloud buyers, they are now faced with a new level of complexity when comparing providers.”
On an individual vendor level, 451 Research found that AWS had the biggest impact in the last quarter due to global price cuts in November on some of its most popular VM and storage services.
Of course, AWS hasn’t been alone in its cost reduction with Google Cloud Platform and Microsoft also lowering prices.
The research pointed to GCP cutting storage prices with the reduction in price of its Coldline archival storage in the US to $0.007 per GB/month, this matched AWS Glacier until the Amazon unit dropped its prices to $0.004 per GB/month, Microsoft also followed suit.
The report said: “AWS, Google and Microsoft appear to be playing a game of tit-for-tat, cutting prices in response to each other to avoid standing out as expensive. In fact, the Digital Economics team detected the first change in object storage price in recent times to be from IBM Softlayer in Q3 2016, which seemed to be aimed at matching AWS, Google and Azure.
“Of course, it could just be coincidental, but we think that is unlikely, considering the aggressive nature and short time period over which these cuts have occurred.”
For those thinking that we are now in a commodity market and that the prices of VMs won’t go down any further, 451 Research thinks you are “very much mistaken.” While price cuts may have moved beyond compute into storage and databases it does not mean that VMs are commodified.
The researchers still believe that there is still plenty of margin left to cut on VMs, so stay tuned for more price cuts.
On the topic of forward looking technologies, such as serverless platforms, AWS is found to be the pace setter, which is unsurprising given that it pretty much created the genre with the introduction of Lambda in 2014.
A raft of announcements at the 2016 AWS re:Invent conference helped to fill out its portfolio, while Microsoft followed suit in mid-November with Azure Functions, Google Cloud Functions remains in alpha and IBM’s Bluemix OpenWhisk went into beta in November.