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What does the cloud pricing war mean for business in 2016?

Tamlin Magee | June 24, 2016
Years on and tit-for-tat price reductions of some of the top public cloud vendors are still a hot topic

"They also consider the experience a provider has, the breadth of services a provider offers, their track record of serving customers and customer references. Cost is just one of many considerations."

There are a number of variations in the way the major cloud vendors price their services. Microsoft's virtual machines include load balancing and autoscaling for free, for example - twin this with the fact AWS' EC2 instances are billed by the hour, rather than by the minute like Azure, and it's a small window into how straight-up price comparisons are not a simple task. 

It's no wonder, then, that customers often turn to third parties to help decipher and manage costs.

While there are obvious benefits to saving cash with the right cloud infrastructure - News Corp and the Financial Times are just two examples - Forrester's Paul Miller suggests that selecting the right cloud is about choosing a service that fits with what you already have, as well as a mindset that gels with where you want to take your business. This is particularly important given the pace with which vendors are adding new services, such as around analytics and machine learning. 

"Cost really can't be the primary motivator there," he says. 

"As all of these clouds become richer and contain a broader range of services, enterprise customers are far more interested in making a longer-term bet, recognising that they need the basic infrastructure, and then the range of value-added services that sit on top of it," Miller says.

Local data law means European CIOs pay more 

Uncertainties about data protection laws following the falling apart of Safe Harbour and the creation of Privacy Shield mean European CIOs are paying more for their cloud services.

The latest Cloud Price Index from analyst group 451 Research says European CIOs are paying more for cloud services - largely as a premium to ensure local provisions are met within the EU.

Although US pricing is the most competitively priced, it costs European businesses between seven and 19 percent to host the same application in Europe depending on complexity.

Penny Jones, Senior Analyst for European Services, examines the issues surrounding data protection at 451Research.

Penny Jones, senior analyst for European services, said: "As European nations can place layers of regulation of top of agreements such as the EU-US Privacy Shield, we expect the latest agreement will do little to appease concerns, particularly in Germany."

 "It won't be clear what the European Court of Justice thinks about the legislation until they have reviewed a case or two. The courts may then say the US needs to do more to protect EU citizens' data privacy."

Ryanair-as-a-Service: thinking short-term on cost


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