Amazon Cloud Price Cuts: MSPs Need A Response, Strategy
Amazon Web Services (NASDAQ:AMZN) has cut prices again. If you’re an MSP looking at the cloud market without sorting through Amazon’s strategy, please consider the following scenario: First, imagine if there was a railroad that could extend its tracks into new towns — every day. Second, imagine that railroad offering better and better on-time performance — every month. Third, imagine that railroad dropping its prices — every quarter. My question to you: Why are you ignoring or trying to compete with that railroad? Instead, shouldn’t you ride those rails?
I ask that question because some MSPs are (A) trying to build their own clouds or (B) plugging into start-up clouds where the future is uncertain. Meanwhile, Amazon Web Services has delivered roughly 30 price cuts since launching — including yet another price cut effective April 1.
There is absolutely no way MSPs can compete with Amazon on price. Instead of fearing that reality, embrace it. Amazon, Google and Microsoft are locked in a cloud price war.
Instead of getting killed in the crossfire, MSPs could benefit in a big way: If you develop a proprietary managed cloud service that runs atop those rails, then your profit margins will INCREASE and the underlying infrastructure costs will DECREASE each time Amazon, Google or Microsoft cuts prices.
I’m not suggesting big cloud providers are the right choice for all MSPs in all scenarios. Some cloud services provides (CSPs) have far better partner programs and are much more responsive to MSPs and VARs.
But here’s the thing: A lot of MSPs have never even fired up an Amazon service. Meanwhile, it only takes a few minutes for your customers to open an AWS account. In fact, they may already have one…
Still skeptical? Consider some of these real-world scenarios:
- 365 Command, which makes an Office 365 management tool for VARs and MSPs, runs its software in the Windows Azure cloud. So does Quosal, the sales quoting and proposal software in which ConnectWise Capital has invested.
- Many Google Apps resellers are now extending their customers into the Google Compute Engine cloud.
- Kaseya, the IT automation software provider for MSPs, runs its SaaS business in StratoGen’s VMware cloud but also runs additional services in Amazon’s cloud.
- Plus, big distributors like Avnet Technology Solutions (see VP Tim FitzGerald interview here) and Ingram Micro Cloud are helping channel partners to plug into those clouds.
Clearly, the cloud railroad is built. Instead of trying to build your own railway system, an MSP can build a highly profitable locomotive to ride the existing tracks — then, keep adding more railway cars (your customers) onto the system.