If you're not yet feeling the pinch of margins because of continuously plummeting cloud services prices from the big boys of the infrastructure-as-a-service (IaaS) market, you may soon feel it. Google (GOOG) is currently on a city-by-city roadshow talking about its strengths as a cloud provider for developers, and one of its executives is positing that the cloud price wars are only beginning.
GeekWire reported that Brian Goldfarb, head of marketing for Google Cloud Platform, spoke with developers on the Seattle, Washington, stop of the roadshow. His message? Cloud prices are dropping, but not quick enough. It's only the beginning of the price war.
Google is hoping to be the catalyst in accelerating price reductions in the cloud world. How that's possible considering the frequency we report on price drops is anybody's guess, but according to Goldfarb, public cloud pricing is dropping 6 percent to 8 percent annually, whereas the hardware backing those cloud services is seeing price drops of 20 percent to 30 percent annually.
That's a pretty substantial difference, especially considering hardware is already a commodity. Cloud services, on the other hand, are still the emerging technology. So as IaaS providers continue their race to the bottom, what does mean for the market, those providers, their partners and the end-customer?
Time will tell, but the lines in the sand are already being drawn.
Rackspace is refusing to play the game that Google, Amazon Web Services, Microsoft Azure and IBM SoftLayer are already engaging in. Amazon is struggling to find profit in its never-ending stream of price reductions. Azure is slowly gaining on its biggest rival.
The race is on. What this will mean for customers is clear—lower prices. How it will affect the channel is a bit hazy, but reduced margins with a stronger focus on selling higher-margin services seems likely.