Object Storage New Front in Cloud Price Wars, 451 Research Says
The cloud price wars have set sights on a new battleground, according to new analysis on cloud pricing from 451 Research. According to the firm, prices around object storage are the next battlefield, while other services, particularly databases, will undergo pricing pressures over the next 18 months.
Object storage pricing has seen a price decline in every region, according to 451, dropping 14 percent over the past 12 months.
451 Research said the cloud storage price battle started in Q3 2016 when IBM SoftLayer lowered its object storage prices. Google, AWS and Microsoft then cut prices on object storage as well.
Comparatively, virtual machines, “the traditional battleground for price cuts as providers have sought to gain attention and differentiation”, dropped 5 percent over the same period. These drops have not hurt providers’ margins; “Even in the worst case, margins for VMs are at least 30 percent,” 451 Research says.
“There is little data suggesting cloud is anywhere near a commodity yet. Analysts believe the cloud market is not highly price-sensitive at this time, although naturally, end users want to make sure they are paying a reasonable price,” the firm notes.
“The big cloud providers appear to be playing an aggressive game of tit for tat, cutting object storage prices to avoid standing out as expensive,” Jean Atelsek, Analyst, Digital Economics Unit at 451 Research said in a statement. “This is the first time there has been a big price war outside compute, and it reflects object storage’s move into the mainstream. While price cuts are good news for cloud buyers, they are now faced with a new level of complexity when comparing providers.”