AMZN: Cloud price wars

The one downside of investing in the cloud is that it’s a commodity business, at least for providers with Gargantuan pockets. At this time there seem to be only four of them: AMZN, GOOG, IBM, and MSFT although a company like Apple could easily join the ranks.

The linked article talks about cloud price wars but I wonder if the author (and some commenters) truly understand Amazon’s position vs. Microsoft. Amazon, as the world’s largest online retailer – and growing into India and China – needs a tremendous amount of cloud capacity for internal use. The same is true for Google but not necessarily for IBM and Microsoft unless they are doing things I’m not aware of. If my thinking is correct then Amazon and Google should be the last two cloud players standing.

I’ve never given any thought to the rate of replacement of servers. One comment implies that a high replacement rate is sure to bankrupt any cloud provider. Is that really true? The fast falling prices of bandwidth – much faster than Moore’s law – were so dire that the optic fiber providers were not able to pay down their capital investment. One cure would be huge growth in Big Data so that volume can make up for the drop in prices. This was not addressed by the commenter.

I watched several Big Data presentations on TED this weekend. Did you know that Big Data can tell you where fish will be on the east coast of Australia? The raw data they use are pictures uploaded to the Internet and they figure out what fish are caught were at what time letting them follow the fish migrations without tagging the fish. This makes Big Data valuable and makes it worth while to pay for cloud storage. The issue is who wins the race, growing data or falling prices? Once you run enough competitors out of business the price wars subside. I believe that massive users of data are in a better position than non-users to survive the price wars.

Can AWS Afford Another Price War With Microsoft?
Oct. 10, 2016 3:07 AM ET
Joseph Mwangi

Summary

Microsoft has announced pretty comprehensive price cuts for Azure virtual machines.

This came in response to Amazon announcing a new AWS region in France about a week ago.

Can AWS afford to engage in another big price war with the likes of Azure?

http://seekingalpha.com/article/4011087-can-aws-afford-anoth…

How to predict the future with big data | Thomas Nørmark | TEDxVennelystBlvd

https://www.youtube.com/watch?v=J0bp2kUh9hw

Denny Schlesinger

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The one downside of investing in the cloud is that it’s a commodity business, at least for providers with Gargantuan pockets. At this time there seem to be only four of them: AMZN, GOOG, IBM, and MSFT although a company like Apple could easily join the ranks.

When look at Cloud investments, I would rather consider those that provide solutions and applications to businesses on the cloud versus those that just sell cloud access which just seems like a commodity.

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