Amazon HALVES cloud storage prices after Google's shock slash Amazon has cut its cloud prices – but not far enough to bring the cost of using its online services entirely below that of rival Google. Prices for Amazon Web Services' mainstay S3 storage will fall by about 51 per cent, said the company's senior vice president Andy Jassy at the Amazon Web Services summit in San Francisco on …
"How much margin were they making before if they can drop their prices by 50% just like that?"
If there was no pressure to do so (lack of serious competition), why would they lower prices? If you can sell an item for 1,000 quid, because people want to pay it and there's nobody else selling it, you're not going to give it away for 50 quid either.
It's called capitalism. And although personally I'd like to see Google fail here (for reasons which are beyond this topic), the competition is good for all customers of any public cloud.
I understand how economics and capitalism work - my point was the juxtaposition of the article title talking about halving prices and the article content saying they were *already* operating at low margins.
It's a curious definition of "low margin" where you can drop prices 50% and still make money, always assuming they are actually making money, of course. It wouldn't be the first time a business has deliberately run at a loss to capture market share and kill off competitors and then raise prices once they have a more captive client base. Not sure I'd want to get into that sort of fight with Google, though. Apparently they also have a few dollars tucked away.
I wonder if you do understand how economics works, particularly in relation to cloud storage. You talk about how Google has reduced their storage price by 50% and can still make a profit. They may not be making a profit immediately after such a reduction, but think about why they have done this. They are looking to attract new customers to their service, which will enable them to make a profit. Where those customers comes from doesn't matter. Some of them will be completely new to using cloud storage, who haven't even considered using it before, the next lot will be those who had previously decided to not use it because of the cost that has now become a viable proposition because of the price cut, and the remainder will have come from Amazon and other cloud service providers, jumping ship because of Google's reduction. Now, Amazon has reduced their prices, some of those considering moving to Google will stay, and others in the first two groups that I mentioned above will look at Amazon and sign with them, because they don't like Google for whatever reason, or don't want to see them richer.
Only 6 digits a month for a solution that includes DR which spans multiple continents and has huge amounts of untapped capacity. Sounds like a bargain to me.
I've seen businesses spending that sort of money per month on a single data centre. By the time you've paid your rent/rates, power for running the kit, cooling the kit, maintenance contracts for all the kit, startup cost of getting the local grid to install resilient power and comms, wear and tear and maintenance of the building, a security guard or several if you're 24*7, etc. etc... Even stupid things like paying someone to come in and mow any grass, clear any leaves, keep the car parking free from snow.
If it wasn't a viable economic solution, people wouldn't be doing it. I'm sure there are people who are doing it wrong, but there are also a lot of people doing it right and making huge savings.
I'd been using Rackspace for years. It was problem-free and the price difference was small enough that I saw no reason to shift.
Now, however, it's significant. I wonder if this could doom Rackspace, who just can't keep up with a destructive price war.
Should I make the switch? (yeah, yeah, never ask El Reg for advice for they shalt say both yay or nay...)
Me too. I guess I'll have to check out the details of Google's implementation …
Rackspace, though, had VPS-like fidelity. The other cloud platforms seem more eager to push their vertical stacks at me, and want me to work their way, which I do not appreciate. I don't see any reason why Google should be different (AppEngine only recently got PHP support). Then again, even Rackspace has had bad moments (their new policy to punish heavy disk I/O on the swap partition, EG). So I'll see if Google meets the basic requirements for Internet host first. If not, well, Rackspace have been good, whatever the added cost--it's been worth paying, IMO.
Reader and Wave were never part of Google's core business so closing them didn't affect it. In terms of money spent the work on Android dwarves all the side projects.
Amazon's marketplace business has margins so low it's been desperately looking for alternative uses of its expensive hardware - thus AWS. As for commitment the customer I've never seen any evidence for that.
Nevertheless, we'll now start to see whether there really is a functioning market for computer services. It's been touted for years but yet to really develop. The competition so far has been inhouse or dedicated hosting. If it becomes possible for companies to move their services quickly and easily between providers and there are provisions for failures (not just technical) then the market may well have arrived.
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