Researchers: Cloud is a no commodity

A new report from 451 Research theorizes that the “race to the bottom” of public IaaS cloud prices is an unsustainable model that is not expanding market share. Instead vendors have transitioned to a “race to the top” to add higher-level application services on top of their clouds to grow their businesses.

Three years ago IaaS vendors dropped prices regularly, sometimes within hours of each other, in what appeared to be a race to the lowest prices in the cloud. Today, public cloud IaaS vendors focus much more on providing higher-level application services that run on top of their infrastructure in an effort to attract and retain customers.

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“Despite all the noise about cloud becoming a commodity, our research demonstrates a very limited relationship between price and market share. Certainly, being cheap doesn’t guarantee more revenue, and being expensive doesn’t guarantee less. Cloud is a long way from being a commodity,” said Dr. Owen Rogers, Research Director of 451 Research’s Digital Economics Unit. “In fact, the real drama is the race to the top rather than race to the bottom.”