When Amazon Web Services has a big press or customer event, the company usually has one staple that it announces: Price cuts.
Such was not the case earlier this month at AWS re:Invent in Las Vegas, the third-annual installation of the company’s big cloud conference. So what’s going on here? Have the prices in the cloud market stabilized? Or is AWS attempting to be rise above the fray of other cloud providers who are undercutting the market leader on price?
We asked AWS and they did not respond. But, analysts say while price is important, it’s not the end all for users deciding whether to use the cloud or not.
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About a year ago the cloud price wars in the IaaS cloud computing market were at their height. AWS was seemingly cutting prices every few weeks. Google would follow. Microsoft announced a strategy that it would match any AWS price cut on core cloud services. There was a race to the bottom.
Since then, it seems like price cut announcements have normalized somewhat. “My opinion has always been that the ‘cloud price wars’ were a manufactured narrative,” says 451 Research analyst Carl Brooks. “The value of the platform is greater than the sum of its parts. Users simply don’t swap from provider to provider like choosing a new place to get lunch.”
AWS executives seemed to be making this point at re:Invent - the company’s breadth and depth of the services it offers on its cloud are unmatched in the market and the economics of using the public cloud’s pay-as-you-go model are compelling at current price levels, or if they were cut by a fraction.
Pretty much everyone expects AWS to continue dropping its cloud prices. The fact that none were announced at re:Invent is probably more of a strategic marketing decision compared to a broader shift in strategy around price. Perhaps this means AWS doesn’t plan to use price cuts as a mouse trap into its cloud as much as it had in the past. But prices will continue to drop. In fact the week after re:Invent AWS announced a price cut to its CloudSearch product.
So, cloud users: The cloud price war is not over. It’s just not as intense as it has been. AWS, Microsoft and Google will continue to cut prices. There are even cheaper alternatives in the market, like Digital Ocean and ProfitBricks, if you’re willing to give up some features.
The point is that the cloud market has matured to a point where these providers don’t need to be cutting prices every time they hold a media event to convince people that the cloud is a valuable proposition.