Big players seem to have realized that there is space for price competition. Infrastructure cost is naturally dropping, maybe even faster than earlier estimated due to new innovative ways to utilize it more efficiently.
At the moment it seems like behavior in telecom market earlier with capacity prices gradually eroding. Every year bandwidth is estimated to be cheaper than earlier and drop down is happening with ever increasing speed.
For old fashioned capacity providers this market situation must look like being in fish market with products that have already old smell, you need to get rid of the merchandise before it will loose all its value.
Big three cloud providers are now playing for market share as it is obvious that economies of scale will be crucial for success here. Also the fact that providing capacity with affordable prices will create an opportunity to pick profits from different parts of value chain. The fact that those value chains actually differ quite a lot, might be the real reason for heavy competition with basic merchandise: the capacity.
Some of the latest drops in the market include:
- Google has dropped 1 Tbyte from $49.99 to $26 per month.
- Amazon AWS will drop prices 1st April from $85 to $30 per month.
- Windows Azure is $68 per month. For smaller use from $40 to $20 per 1Tbyte
One observation about prices is that there are also other parameters to take into consideration. Pretty much like selecting mobile operator, otherwise you might be fooled with the total cost of your environment. Also you are picking the horse for technology race at the same time as environments are different.
Good article about price war is ” Who wins the cloud price war” by David Chernicoff. Maybe you will find server and storage capacity in future from bourse like any other consumable goods (i.e. electricity)?