When Cloud Computing Giants Go to War, You Win
As prices for cloud services drop, you may want to rethink your efforts to build your own computing and data storage systems.
According to the The Wall Street Journal, Amazon, Google, and Microsoft have started a price war to lure customers to their cloud services (Amazon Web Services, Microsoft Azure, and Google Compute Engine, respectively). Last month, the three tech companies slashed their prices by as much as 85 percent within days of each other.
Research firm Gartner predicts companies will spend $13.3 billion this year on renting computing power from other providers, a 45 percent increase since 2013, the Journal reports. Although that number is still a fraction of the $140 billion companies spend a year to build their own systems, the price competition is making it harder to justify continuing to do so.
Technology-consulting firm SADA Systems estimates that a medium-sized website that gets 50 million monthly page views could spend at least $1,200 a month to buy servers and other necessary equipment, the Journal reports. If that same company were to rent its computing system from Amazon, Google, or Microsoft, the bill could range from $270 to $530 a month.
In a survey by consulting firm RightScale, 87 percent of tech executives said their companies outsource computing power for at least one task, WSJ reports.
Michael Simonsen, CEO of real-estate startup Altos Research, tells WSJ that his company uses Amazon Web Services to "crunch data on about 100 million U.S. home listings." Thanks to the warring cloud factions, his bill was cut almost in half last month.
"Nobody ever gives you a 40 percent price break overnight," Simonsen tells the paper. "Our direct benefit is the opportunity to create more products, faster."