When to go private cloud

As represented with the star in the map above, according to CPI data, at labor efficiency of 1,000 VMs per engineer and 66% utilization, these enterprises are poised to beat public cloud on price regardless of whether they use a commercial orchestration software package, an OpenStack distribution or the OpenStack source.

And, on IaaS pricing:

But price still does matter: In a 451 Research custom study commissioned by Microsoft earlier this year, the biggest reason to change primary provider was price, cited by 34% of respondents. Consumers don’t necessarily want the cheapest cloud service, but they don’t want to feel ripped off. If there is a cheaper option elsewhere, it appears end users will take it into consideration.

Announcements on price cuts gather attention, and are a great publicity and discussion tool for service providers. We think cloud prices will continue to come down through 2017, and may spread beyond virtual machines into object storage, and perhaps even databases – virtual machines came down 7% globally in 2015, but the cost of our small application only came down 2.4%. The fact that margins are still healthy suggests providers aren’t sacrificing huge amounts of gross margin to give such cuts. If they are, it might be a few nickels and dimes here and there, but it’s more likely that they are reducing costs through better procurement and management. If we are in a cloud price war, we’ve yet to see it really get off the ground.

And, see more commentary on the topic of IaaS pricing.

Source: Cloud gross margins: The price war has yet to really kick off

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