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The war on cloud pricing: Object storage moves into the mainstream

24 Apr 2017

The latest analysis on cloud pricing by 451 Research highlights that the cloud price battle field has shifted from virtual machines (VMs) to object storage.

And the firm predicts that other services, particularly databases, will undergo the same pricing pressures over the next 18 months.

451 Research says that virtual machines have been the traditional battleground for price cuts as providers seek to gain attention and differentiation. But now, the tide has turned as object storage pricing declines, including a drop of 14% over the past 12 months.

For comparison, the cloud mainstay of virtual machines has dropped a relatively small 5% over the same period.

The analysts believe that the move of price cuts beyond compute is due to market maturity.

Other factors include increasing cloud-native development and faith in the cloud model, as well as a competitive scrum to capture data migrating out of on-premises infrastructure.

“The big cloud providers appear to be playing an aggressive game of tit for tat, cutting object storage prices to avoid standing out as expensive,” comments Jean Atelsek, analyst, Digital Economics Unit at 451 Research.

Atelsek says, “this is the first time there has been a big price war outside compute, and it reflects object storage’s move into the mainstream. While price cuts are good news for cloud buyers, they are now faced with a new level of complexity when comparing providers.”

The cloud storage battle started in Q3 2016 when 451 Research’s Digital Economics Unit identified a reduction in IBM SoftLayer’s object storage prices.

According to 451 Research, Google, AWS and then Microsoft followed suit with cuts as well.

The 451 Research Digital Economics Unit predicts that prices for virtual machines and object storage will continue to come down, with relational databases likely to be the next competitive front.

In their own words, 451 Research explains the Cloud Price Index as the industry's most rigorous analysis of the cost of cloud computing.

It explores the external costs associated with ownership of public and private cloud, including colocation, hardware and software.

It provides benchmark indicators for the costs of deploying and operating private cloud infrastructure to help service provider appropriately price their services and help end users assess and compare their procurement options.

451 Research’s latest analysis outlines that in the cloud price war, cloud storage has become the new battleground as the market sees a shift from virtual machines (VMs) to object storage. 

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