Don't let the Google-Amazon price war lead to the wrong cloud

The two major cloud providers want to buy the market with deep discounts, but be sure to look beyond costs before committing

I'm beginning to view cloud providers as carnival barkers, standing on the sides of the strand, shouting out lower and lower prices for their services, in hopes of luring major enterprises to their tents. Of course, instead of peddling a two-headed goat, they're hawking on-demand and reserved instances.

What's happing is that cloud providers are buying their way into the market, trying to create enterprise demand that isn't coming naturally. To do so, they're lowering prices and even deferring bills to attract both the Global 2000 and larger "small enterprises."

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The public price wars are fun to watch. A day after Google announced sweeping price cuts last week, Amazon Web Services lowered prices for the 42nd time in its history. (Microsoft, which is trying to be as big in the cloud as AWS and Google, matched AWS's price cuts just yesterday.)

As part of its effort to draw in the enterprise crowd, Google will add BigQuery Streaming to its BigQuery data analytics platform. That new service is designed to ingest as many as 100,000 records per second per table, at a cost of $20,000 per month for reserved queries and $5 per terabyte for 5GBps on-demand queries. That's a great price for a big data system, considering its capabilities.

Meanwhile, AWS slashed prices on its EC2 on-demand rates by as much as 40 percent, largely to steal thunder from Google. When you crunch the numbers, as RightScale did, you'll find that AWS is slightly cheaper overall. But your actual costs will vary, depending on the problems you're trying to solve.

How do you take advantage of these competing carnival attractions? As with the storage price wars in the 1990s, I assume that all large cloud computing deals are highly negotiable -- so negotiate! In many cases, the terms and the SLAs should be in your favor. I suspect that many enterprises can get cloud services at no cost for a few years for at least their initial projects.

But don't let the amazing features and prices blind you to what happens after you've been in the tent a while. Many cloud providers will jack up prices in a few years, once you've become dependent on their technology -- a common practice for enterprise software providers. You should expect cloud providers to pull similar stunts.

And never forget that a cheap price isn't ever the right reason to choose a cloud service. The price of cloud services pales in comparison to the value of time-to-market and agility advantages -- and those admittedly difficult-to-calculate advantages should be your reason to adopt the cloud. Only then do you do compare prices and features to get the best deal both for now and later.

This article, "Don't let the Google-Amazon price war lead to the wrong cloud," originally appeared at Read more of David Linthicum's Cloud Computing blog and track the latest developments in cloud computing at For the latest business technology news, follow on Twitter.

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