A price war in cloud computing was kicked off recently when Google announced that it will drop prices across their cloud computing services. They also announced new key features like Managed VMs (virtual machines) and improvements in developer-experience. This will strengthen their position as a serious contender for the heavyweight berth in the Infrastructure As a Service (IaaS) segment, a position currently held by Amazon Web Services (AWS).
In response to this, Amazon announced this week that they will be dropping the prices on most of their cloud computing services with price cuts ranging from 10% to 65%.
This will be the 42nd price reduction for AWS since it was launched eight years ago. Amazon is considered the pioneer of cloud computing and remains the dominant force in the market, providing amongst others, the underlying infrastructure for online movie streaming service Netflix and social network Pinterest.
The fast-growing AWS business helped transform the company from traditional online retailing into a tech industry giant, and is often cited by investors as a major pillar of its future growth.
Following on from Amazon’s price cuts, Microsoft has also announced that it will be lowering prices. They have a standing promise to match the price of Amazon Web Services and are therefore making cuts accordingly.
IBM, on the other hand, has chipped in saying they will not be lowering their prices, according to IBM’s SoftLayer CEO Lance Crosby, “From an IBM perspective we don’t want to be associated with being the low-cost leader in the cloud.”
IBM has recently contested Amazon’s claim as market leader, arguing that their combined portfolio of cloud services and applications commands higher revenue, making them the cloud’s market leader.
But others are making inroads. Earlier this week, Cisco announced plans to spend $1 billion over the next two years to build up their cloud services business. With this they plan to build the world’s largest intercloud, a network of clouds which will be created together with a set of partners. This intercloud will be designed for the ‘Internet of everything’, with a distributed network and security architecture designed for high-value application workloads, real-time analytics, and ‘near infinite’ scalability.
Locally, Telkom is also looking to grow their cloud market share in South Africa. As opposed to South African customers using cloud services from across the world, Telkom believes the timing is ideal, in terms of market readiness and maturity of technology, to roll out cloud services from its data centres.
With connectivity issues being the major drawback in South Africa when looking at international cloud services, Telkom has the opportunity to leverage their large local fibre network to package their cloud services with connectivity levels that international companies cannot offer.