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As I look at the pricing wars, I realized something: If you choose to use "cloud" based in your projects or businesses, you will never know the long-term costs

by umsm 13y ago

As I look at the pricing wars, I realized something: If you choose to use "cloud" based in your projects or businesses, you will never know the long-term costs associated with operating in the cloud. The cloud provider can raise or lower prices as they see fit. What prevents these for-profit companies to keep lowering prices and not raising them?

icebraining 13y ago
Nothing truly prevents them, but competition provides an incentive for doing otherwise. Of course, that only works if you use provider-agnostic services (e.g. raw VMs, services with standard APIs) instead of locking yourself in to some proprietary service/API, otherwise the switching costs might be prohibitive.
bgray 13y ago
Competition?
bduerst 13y ago
Simple Answer: Competition. The cost per performance ratio is always going down too, which translates into lowered costs for them and ultimately the customer. They also can't collude together (at least not legally) to raise prices.
ChuckMcM 13y ago
Nothing really, although on the flip side if you've got machines in a co-location data center that lease comes up for renewal and your prices are going to change. Often they will go up because the data center folks figure its harder for you to move than negotiate. As long as AWS and Google prices are 10x the cost of self running for large deployments that won't be an issue, but when they start getting closer to parity it is going to put the data center guys in a world of hurt.
Patrick_Devine 13y ago
It's unlikely that AWS prices would increase because they're already making some healthy profits, and there is (as others have said) more and more competition. For the competition, they don't offer the same services at AWS, and don't have the same market share, so they have to offer at a discount. That said, there can be quite a bit of customer lock-in associated with the "premium" services, such as DBaaS, or DNSaaS which make it really difficult to switch off of a platform. That could be the hook at some point in the future to keep people paying the "AWS tax".
mercenario 13y ago
> The cloud provider can raise or lower prices as they see fit. What prevents these for-profit companies to keep lowering prices and not raising them? This is different from non-cloud based providers how?
chimeracoder 13y ago
This is the old rent vs. buy debate, but for hardware instead of real estate. Renting an apartment places a rough upper bound on your monthly expenses, since in most places, the landlord is required to do maintenance and cannot raise your rent until the lease is up for renewal. Buying a house a rough lower bound, since your mortgage can increase unexpectedly, and you are responsible for all repairs and maintenance yourself. So, you can never know all costs with certainty ahead of time, but if you care about predictability, it's probably better to rent (ie, go with the cloud) than to buy, because it's easier to bound your costs over a given duration.
slattery 13y ago
I think the only reason prices would ever go UP, would be if the cost of generating electricity went up.. In which case, your in-house computing would cost more, as well. Short of that, the trend seems to be costs going DOWN. Amazon recently noted their 42nd price decrease.

by umsm 13y ago

icebraining 13y ago

Nothing truly prevents them, but competition provides an incentive for doing otherwise. Of course, that only works if you use provider-agnostic services (e.g. raw VMs, services with standard APIs) instead of locking yourself in to some proprietary service/API, otherwise the switching costs might be prohibitive.

bgray 13y ago

Competition?

bduerst 13y ago

Simple Answer: Competition. The cost per performance ratio is always going down too, which translates into lowered costs for them and ultimately the customer. They also can't collude together (at least not legally) to raise prices.

ChuckMcM 13y ago

Nothing really, although on the flip side if you've got machines in a co-location data center that lease comes up for renewal and your prices are going to change. Often they will go up because the data center folks figure its harder for you to move than negotiate. As long as AWS and Google prices are 10x the cost of self running for large deployments that won't be an issue, but when they start getting closer to parity it is going to put the data center guys in a world of hurt.

Patrick_Devine 13y ago

It's unlikely that AWS prices would increase because they're already making some healthy profits, and there is (as others have said) more and more competition. For the competition, they don't offer the same services at AWS, and don't have the same market share, so they have to offer at a discount. That said, there can be quite a bit of customer lock-in associated with the "premium" services, such as DBaaS, or DNSaaS which make it really difficult to switch off of a platform. That could be the hook at some point in the future to keep people paying the "AWS tax".

mercenario 13y ago

> The cloud provider can raise or lower prices as they see fit. What prevents these for-profit companies to keep lowering prices and not raising them? This is different from non-cloud based providers how?

chimeracoder 13y ago

This is the old rent vs. buy debate, but for hardware instead of real estate. Renting an apartment places a rough upper bound on your monthly expenses, since in most places, the landlord is required to do maintenance and cannot raise your rent until the lease is up for renewal. Buying a house a rough lower bound, since your mortgage can increase unexpectedly, and you are responsible for all repairs and maintenance yourself. So, you can never know all costs with certainty ahead of time, but if you care about predictability, it's probably better to rent (ie, go with the cloud) than to buy, because it's easier to bound your costs over a given duration.

slattery 13y ago

I think the only reason prices would ever go UP, would be if the cost of generating electricity went up.. In which case, your in-house computing would cost more, as well. Short of that, the trend seems to be costs going DOWN. Amazon recently noted their 42nd price decrease.