Cloud Price Wars Have the Potential to Negatively Impact the Overall Industry

Are cloud price wars potentially bad for the cloud industry? This seems to be the case as far as quality and variety of options are concerned, according to Matt Weinberger, a Cite World writer. In many ways, cloud price wars have resembled Walmart’s efforts to be the lowest seller in all areas. You might get the lowest prices there, but pretty soon they’ll be the only place you can buy these items: everyone smaller is driven out of business.

Cloud computing has been getting cheaper thanks to the falling cost of physical hardware solutions. The big-name providers, Amazon and Google, have been engaged in an ongoing price war that offers their services at low, low prices — so low that there is barely a profit margin on them. Amazon and Google would rather cut prices now and gain a spot in the marketplace rather than offer their products at their true selling price.

This decision, though, impacts the rest of the industry. There is a large variety in the types of cloud hosting services available to small businesses, and the right cloud solution company for a technology company might not be the same for a defense contractor. Yet often, both groups are looking only at one main factor in choosing their cloud solution providers: the pricetag.

This places smaller cloud companies that specialize in niche markets in a precarious position. They can either keep their costs reasonable and watch as customers leave them for lower priced Google and Amazon, or they can cut costs and eventually flop because they can’t generate enough revenue to stay in business. Either way, the endless price war between the cloud giants will eventually end, but once the battlefield is cleared there will be fewer options left for those who need more specialized cloud solutions.

What are your thoughts on the cloud solutions price wars? Do you think they could potentially harm the industry as a whole? Let us know in the comments. Get more on this here.