A new report has revealed that entry-level pricing for cloud computing services is now 66% lower than it was two years ago.
According to Tariff Consultancy’s (TCL) Pricing the Cloud 2 – 2016 to 2020 report, the decline in pricing reflects in part the intense competition between public cloud computing providers, and also the rapid product innovation that is taking place among the key worldwide platform providers. TCL calculates that the average entry-level cloud computing Instance is now at USD $0.12 per hour (based on Windows OS).
However, the report also suggests that the rate of price deflation is likely to slow as the range of pricing available has narrowed over the past two-year period, as cloud computing providers have reduced their rates towards the levels charged by the global cloud providers such as AWS, Microsoft Azure and Google.
As would be expected, research points to the reduction in pricing driving cloud adoption and cloud services are now being used by enterprises across a range of their critical applications.
The cost of introducing private cloud services is also falling, which is encouraging large enterprises to adopt a hybrid cloud infrastructure. TCL has also identified a key trend for data centre companies, IT Integrators and some telecom providers to become the integrator of multiple cloud services.
Shift of focus
As price is forecast to stabilise, the report adds that the emphasis of cloud computing providers is now increasingly on service innovation rather than price. The global cloud platform providers, including AWS, Microsoft and Google, now offer a wide range of compute instances suitable for intensive computing, memory, content and fast industrial/organisational applications.
Cloud providers are introducing analytical services available for cloud computing applications and are now offering cloud for the emerging Internet of Things (IoT).
New cloud services are being introduced to cater for specialised customer requirements as a means of avoiding price commoditisation.
TCL forecasts that average public cloud pricing will fall by 14% over the four year period from 2016 to 2020 – but with less intense price competition over the period. TCL also anticipates that revenues for public cloud services will increase rapidly over the same period by more than three times to $82bn.