The cloud services sector is still a long way off from being a commodity market, according to the latest note from analyst house 451 Research.
The results, which have been published in the firm’s latest Cloud Price Index (CPI), show the ‘race to the bottom’ in cloud pricing, as exemplified by continued price cuts from Amazon Web Services (AWS), Microsoft, Google and others, is something of a misnomer and that the supply of higher value services will be key to long term growth for vendors. Despite this, the researchers argue VM pricing went down 12% on average over the past 18 months, while NoSQL, load balancing, and bandwidth among others remained stable.
As a result, 451 has come up with the ‘cloud commodity score’ (CCS) metric, which measures customers’ sensitivity to price by region. The researchers found that the US was the region most likely to have market share driven by cheaper prices, yet argued Europe and APAC present more opportunities to vendors because the markets are ‘fractured’.
“Despite all the noise about cloud becoming a commodity, our research demonstrates a very limited relationship between price and market share,” said Owen Rogers, 451 Research digital economics unit research director. “Cloud is a long way from being a commodity. In fact, the real drama is the race to the top rather than the race to the bottom.”
This publication has examined the supposed disparity between the major cloud players and how their pricing stacks up. Research from Cloud Spectator back in March found 1&1 to be the best ranked European cloud provider, based on performance as well as price, well ahead of Google, Azure, and AWS. Kenny Li, CEO of Cloud Spectator, told this publication that smaller players have an advantage by offering high-performance infrastructure at more competitive prices.