UPDATED 03:24 EDT / MAY 27 2016

NEWS

Cloud wars: Value, not price, drives market share in the public cloud

Contrary to what many have suggested, the public cloud market is still a long way from becoming a commodity market, according to new research from analyst firm 451 Research LLC.

The findings come from 451 Research’s latest Cloud Price Index (CPI), which shows that the so-called “race to the bottom” in public cloud, embodied by the constant price cuts from leading providers like Amazon Web Services (AWS), Microsoft, Google and others, is misleading. In fact, price barely even comes into the equation when enterprises consider migrating to the cloud. Instead, businesses are more interested in the value cloud providers can deliver them, 451 Research says. Even so, this hasn’t stopped cloud companies from slashing prices whenever they see fit to do so.

To inform users about this truth, 451 Research has created a new Cloud Commodity Score (CCS) metric that measures the sensitivity of customers to price by region. Somewhat curiously, 451 Research found that U.S. customers were the most sensitive, and the region is the most likely to see market share driven by cheaper prices. Despite this, the analyst firm suggested that the Europe and Asia-Pacific regions are likely to present better opportunities for cloud firms, because those markets are more “fractured” than that of the U.S.

Diagram

“Despite all the noise about cloud becoming a commodity, our research demonstrates a very limited relationship between price and market share,” Owen Rogers, 451 Research digital economics unit research director, said in a statement “Cloud is a long way from being a commodity. In fact, the real drama is the race to the top rather than the 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.

Image credit: geralt via pixabay

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