Daniel Callahan, analyst at TBR, says Cloud services are an essential part of centralized analytics. IoT customers will work with cloud service providers to bring together data sources from widespread edge computing locations to drive more transformational insights.
However, in TBR’s 1H16 Commercial IoT Customer Research, we found cost remains one of the primary factors in a customer’s purchase decision. Customers are still skeptical of the amount of benefit they will gain from the costly data transport, storage and compute required with cloud-based centralized analytics.
Google, Amazon Web Services (AWS), Microsoft, IBM, Oracle and Rackspace are some fo the major cloud service providers. The first three are considered as the big three providers.
The big three are competing to capture the attention of customers or partners seeking cloud services. Aside from features, price competition is leading to competitive discounting.
In a blog post published on November 14, AWS’ Chief Evangelist Jeff Barr announced price cuts to the company’s EC2 compute services. The price cuts will vary based on region, service, platform and EC2 product.
In AWS’ eastern U.S. region, costs for its high-performing C4, general computing M4 and T2 will be reduced by 5 percent, 10 percent and 10 percent, respectively. Most APAC regions are seeing higher reductions in the 20 percent range.
Barr highlighted this is AWS’s 53rd price reduction. AWS told TBR that it will reduce prices continually when its own costs reduce, scaling being a major factor, to pass along savings to customers.
However, AWS noted it stands firm on its available prices and does not discount additionally to lock in customers, as once implied in the “cloud price wars” of prior years.
In a blog post published on October 3, Corporate Vice President Takeshi Numoto noted price cuts to virtual machines on Microsoft’s Azure cloud platform.
General purpose instances saw reductions ranging from 15 percent to 50 percent, while compute-optimized instances were reduced up to11 percent. The company’s A series price reductions were up to 36 percent less than previous prices.
A few days later, Kirill Tropin, product manager at Google Cloud Platform wrote in a blog that they also pitched lower prices.
While Tropin did not specifically point out product discounts, he stated the company has “new storage classes, data life cycle management tools, improved availability and lower prices …”
Additionally, Google offers Sustained Use Discounts, which the company automatically applies to existing customers to ensure its services are the most cost-effective cloud option.
TBR has observed Google generally has some of the most customizable compute offerings and thus, the most flexible pricing. TBR believes Google may be the most affordable, but also begs a certain level of technical understanding due to customization, which may lead less-tech-savvy customers to AWS, Microsoft Azure or other options.
Due to the nature of cloud — the platforms generally offer the same baseline capabilities — and the competitive pricing activity to onboard customers, cloud storage is increasingly becoming a commodity business.
Cloud service providers will need to pitch advanced compute and AI capabilities and services to drive up gross profit where, according to TBR, Google Cloud Platform and Azure Cloud have the advantage over AWS.