So what if cloud prices did go up?

cloudsavings264x300Last month, Amazon and Microsoft increased prices in a few regions. Prices aren’t likely to go up across the board, but pricing for some services could stall or even rise slightly. In this market, stalled prices feel like a price increase because in general, prices decline frequently.

Amazon has reduced prices 43 different times for various services since launching Amazon Web Services in 2006. Let’s look at two core AWS services:

  • S3 storage. When Amazon S3 launched, a GB of storage cost $0.15 per month. That same storage now costs $0.03 per GB/month, an 80% price decrease. Amazon also offers the Glacier archive service for $0.01 per GB/month.
  • The “Original” EC2 instance. The first EC2 instance was the m1.small, offered at $0.10/hour for on-demand use. The equivalent today in the t2.small, available for $0.026 cents/hour. The t2.small has several times the processing power at about one quarter of the cost.

Amazon also now offers a free tier with 750 hours of basic compute and limited storage. You can also buy reserved instances, typically at 30% to 60% lower cost than the on-demand instances, and even bid on unused capacity for short-term use.

But what would it mean if prices for some cloud services increase? Would you still keep using the cloud at the same rate, or would you lean more towards running servers in your datacenter?

We’ve flocked to cloud because it’s convenient, not because it’s cheap (it happens that it’s cheap, too). Storing data in the cloud is convenient, and can also reduce the IT footprint and spend on primary storage, backup, tape and replication. The cloud takes care of all of that for you.

GRAEF saved $250,000 in one year on primary and secondary storage by centralizing its file storage to the cloud.


Provisioning servers is also easier in the cloud. Need 10 new servers in your datacenter? This may sound like a familiar process:

  1. Get quotes from at least two suppliers
  2. Go back and forth between the vendors and finance to get a better price
  3. Get the P.O. approved and order the equipment
  4. Wait since it’s probably backordered
  5. Rack and configure the servers
  6. Deal with a return on a failed drive or other component
  7. Patch Windows and install other software
  8. Add everything to your domain
  9. Realize your SAN is running low on space, figure out budget for that
  10. Repeat next time you need servers

In the cloud?

  1. Select your instances
  2. Pay with your credit card
  3. Launch them

We use the cloud because it makes everything so much simpler. Ideally, we could connect cloud resources into our datacenter and run it as part of our internal network. That turns out to be harder, but something we’ve solved with Panzura SkyBridge.

Amazon, Google and Microsoft make news when they reduce prices, and we tend to focus a lot on price. We should pay attention to how much we pay for any product or service, but keep it in context. How much value are we getting out of the service? I’ll look at that in an upcoming post.