Paul Miller – Sometimes, free is too cheap
Tue 22 Apr 2014
Cloud providers keep dropping their prices. Almost every day another one of them is announcing a new saving for the customer. The price charged for some cloud services, especially in the consumer space, is heading towards £0, but, asks Paul Miller, how likely are we to see similar strategies in the business world?
According to a recent report from RightScale those price cuts are coming thick and fast, and the rate of change is accelerating. Looking across Amazon Web Services, Windows Azure (which we’re to call Microsoft Azure from April), Google Compute Engine and Rackspace’s public cloud offering, RightScale, counted 22 price drops in 2012, and 26 in 2013. As in so much that is cloud-related, AWS led the pack by both volume (13 of the 26 cuts) and scale (reducing prices by an average of 32% across various AWS services). The cuts continue in 2014 and Google has just announced its own latest round of reductions; storage costs fell by almost 70% for some users of Google’s cloud.
Storage costs are hardly the biggest expense in a typical cloud project, but they are an obvious target for shaving a cloud provider’s margins to the bone. The cheaper (and easier) you make it for customers to store data with you, the more they’re likely to store data with you. Data gradually uploaded over weeks, months and years soon becomes too massive to move elsewhere, making it harder for existing customers to switch to other providers. Whilst many enthusiastic adopters of cloud are wary of investing too heavily in the rich but proprietary features cloud providers increasingly offer on top of their basic compute and storage products, there is far less reticence around making ever-more use of abundant and cost-effective storage.
In the consumer and small business space, at least, increasing volumes of cloud storage are being offered for free. Dropbox gives users 2Gb, Microsoft’s recently renamed OneDrive offers 7Gb, and Google leads the pack with 15Gb. Give us your documents, they wheedle. Automatically upload your photographs, they cajole. Easily back up your music, they entice. And, before you know it, tens of documents, thousands of photographs and hundreds of songs sit in one or other of these cloudy file stores, and the pain of moving elsewhere is almost too much to contemplate. Trapped by the sheer weight of the data you’ve entrusted to cloud storage, the argument goes, it becomes a no-brainer to use – and pay for or share data with – the associated software and services.
Might the same model work in the enterprise space? In theory, at least, there’s no real reason why not. There may, however, be an issue of perception to address. Whilst consumers almost appear to expect that services like cloud storage should now be free, enterprises expect to pay for their infrastructure. Indeed, often they want to pay for it, and to secure the comfort of support contracts, viable (revenue generating) suppliers, and throats to choke when things go wrong.
Free storage is, increasingly, the gateway drug to consumer use of cloud services. It remains to be seen whether corporate users will be as easy to entice.