Price doesn't really matter when it comes to enterprise cloud adoption, a new report by 451 Research suggests. Instead, it's the value of the offer that businesses look at most.
The results, released in the Cloud Price Index (CPI) report, show that prices for virtual machines dropped 12 per cent in the last 18 months, but the prices of storage, NoSQL, load balancing, bandwidth and other cloud services are stable, and are brigning in money.
In order to stay relevant, however, hyperscale vendors need to 'move up the stack', meaning they need to add higher-value services as fast as possible, as the price of cloud computing will continue its decline before it ultimately reaches the bottom.
According to researchers, it's not about who gets to the lowest price first, but who gets to offer services of the highest value. It's not a race to the bottom, but to the top.
“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."
According to the report, cloud providers are looking at new services, and emerging markets for growth. The report also highlights these emerging markets, as well as markets where businesses are willing to pay premium prices for the best service.
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