Skip to main content

GigaOM Structure: Cloud hosting massively overpriced says ProfitBricks CMO

Discussing how European cloud firms can compete with Amazon at the GigaOm Structure:Europe conference, Andreas Gauger, CMO of German based ProfitBricks said price is key.

"It's very easy to beat Amazon on price, it doesn't care about price, it's actually a high price," he said. Gauger went on to explain that, in his 18 year career in hosting, he has never seen such high margins as that earned through cloud.

Gauger believes there is currently no need to charge so much as cloud hosting is not actually that costly. This is what ProfitBrick will be focussing on in the future - out pricing its American rivals, he said.

This idea was echoed Antti Vilpponen, GM of UpCloud, although for Vilpponen, it is not about lowering the cost, but instead offering much more for the same price, "we need to over innovate," he said.

All on the panel - which also included Richard Davies, CEO of ElasticHosts and Bernino Lind, COO of CloudSigma - agreed that offering bespoke services and infrastructure solutions that are extremely vertical is one of the most important aspects of their businesses.

Amazon have very rigid horizontal options they said, and do not offer services that exactly meet individual needs of clients.

People often end up over buying with Amazon as if they need just slightly more than one level of hosting they have to jump to the next, so increasing cost, explained Davies.

Another discussion was the inevitable impact of the Prism scandal, something which Gauger commented has been a positive thing for European cloud hosts.

We have clients coming to us saying: "Our CEO told us we can not contract with an American company [because of Prism]," added Lind. CloudSigma is based in Switzerland but provides cloud services across the US as well as Europe.

He said the company has received letters from the American courts calling the company to meetings in the US. Their response has been to tell them to go through the Swiss courts, explains Lind, after which they hear nothing further. In Switzerland, "you're innocent until proven guilty," he added.