Data center and infrastructure as a service provider Phoenix NAP announced on Tuesday that it has lowered prices on its cloud hosting offering Secured Cloud.
Launched in November 2011, Secured Cloud is an infrastructure-as-a-service platform that allows for the rapid creation of VMs through a simple user interface. Its launch helped Phoenix NAP push beyond data center and colocation to a more complete platform.
This announcement comes a month after cloud providers Google, Microsoft, and AWS lowered their clouds storage prices, but Phoenix NAP president Ian McClarty says the decision to lower Secured Cloud’s prices was not a reaction to these moves since it was already working on lowering its prices based on customer feedback.
“It’s a tough conversation to have with a client when they look at traditional hosting operations and then they start to do an apples-to-apples to comparison,” McClarty says in a phone call with the WHIR. “We felt that it was critical for us to do more of an apples-to-apples comparison. It’s an easier conversation to have with someone that is interested in cloud but wants to move from hosting and is looking at what they can get a server for with dedicated resources.”
He says customers get the versatility of cloud, and the value-adds, but cloud is still not even close to the same price-point as traditional hosting.
To lower its prices, McClarty says it reevaluated the way it did its modeling, and based it on information about cloud usage. According to the press release, Secured Cloud now starts at 2.5 cents. Eight vCPUs with 64 vRAM were previously $3.72 per hour; they are now only $1.20 per hour. Storage prices have also been reduced, and incoming bandwidth is now free.
“We were able to remodel it and get a better price-point that way, we didn’t really change anything major around we basically just did financial remodeling,” he says.
McClarty says lowering cloud pricing is not an easy task, so Phoenix NAP was working on it ahead of the lower cloud price announcements made by other cloud vendors last month.
“It’s showing maturity in the marketplace and I foresee more compression coming down the pipe as more competitors try to get in, you’re going to get people that are hungrier,” he says.
McClarty says another “big compression” in cloud prices cloud happen before the end of the year.
Philbert Shih, founder and managing director of Structure Research, thinks the price decreases the cloud market has seen lately are the result of several factors.
“In many ways, price decreases are an outgrowth of the natural evolution of the sector. As cloud matures, providers get better at what they do. They automate and drive efficiencies and can pass those cost savings down to customers,” Shih writes in an email to the WHIR. “They also grow and take advantage of the economies of scale. That also gets passed down to customers. There is also some commodification going on with things like hardware and bandwidth.”
“Finally, its fair to say that innovation is also part of it. Cloud infrastructure providers are looking at cheaper and more efficient ways to build data centers and those cost savings are also finding its way into a reduced end user price point,” Shih says.
Talk back: Have you had to consider lowering your cloud prices recently? Is cloud cost a barrier to your customers adopting cloud? Let us know in the comments.