Entry-level prices for cloud computing are now 66 percent cheaper than they were just two years ago, thanks to providers continually slashing costs in the face of increased competition.

Tariff Consulting’s (TCL) newly released Pricing the Cloud 2 – 2016 to 2020 report shows that the average entry-level cloud instance now costs just $0.12 per hour, based on a survey of more than 20 cloud providers over a two-year period ending November 2015.

“The decline in cloud pricing reflects, in part, the intense competition between public cloud computing providers, and the rapid product innovation that is taking place among the key worldwide platform providers,” TCL said in a press release, noting that Infrastructure-as-a-Service (IaaS) market leader Amazon Web Services has launched more than 500 product features since 2008.

The result of this intense competition means that the price gap between various cloud providers has shrunk significantly over the last two years, and reached a point of “relative stability”, TCL’s research suggests. It added that these price reductions are also furthering hybrid cloud adoption, creating new opportunities for cloud integration.

“The range of pricing available has narrowed over the past two year period, as cloud computing providers such as Rackspace Hosting have reduced their rates towards the levels charged by the global cloud providers, such as Amazon Web Services (AWS), Microsoft Azure and Google,” TCL said.    “Both AWS and Microsoft are offering a similar entry-level compute instance, with other cloud providers following with similar pricing.”

TCL said cloud pricing is “more rational” now than in the last two years, with free tiers of service being replaced by trial periods of one-to-three months.

Nonetheless, TCL believes the price of cloud services will continue to fall, albeit more slowly. It reckons cloud costs will decrease by 14 percent between now and 2020.

“The emphasis by the cloud computing provider is now increasingly on service innovation, not price,” TCL said, effectively predicting an end to the ‘cloud price wars’.

It said that providers would instead look to compete on the services they offer, noting that AWS, Microsoft and Google all offer a wide range of compute instances for intensive computing, content, memory and fast I/O applications.

“Cloud providers are introducing analytical services available for cloud computing applications and are now offering cloud for the emerging Internet of Things [IoT],” TCL continued. “New cloud services are being introduced to cater for specialized customer requirements as a means of avoiding price commoditization.”

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