The overall price of public cloud computing has dropped by six percent over the last three months, but variance between services, and especially regions, means the benefit is unequally distributed, according to the latest Cloud Price Index released Tuesday by 451 Research. Cloud users in the US pay the lowest rates, according to the report, followed by those in Europe, who pay a 7 to 19 percent premium for the same application.
Other regions fare even worse, with cloud users in Asia Pacific paying 14 to 38 percent more, and those in Latin America paying 38 percent more on average, due to a lack of competition among providers.
“When evaluating cloud providers, enterprises should consider how they will take advantage of variances in prices in the short and long-term to cut costs,” Dr. Owen Rogers, Research Director of 451 Research’s Digital Economics Unit, and the report’s author said in a statement. “This means being aware of the real impact of price-cuts and understanding geographical differences. We found one provider charged more than twice the average US price for hosting in Latin America, whilst another offered an 11 percent discount for hosting in Europe compared to the US. The global market for cloud is complex and cloud buyers need to understand typical pricing to properly evaluate their options and negotiate with suppliers.”
Global pricing cuts in early 2016 by AWS and Microsoft contributed to the decrease in price, however their effect is mitigated by the consistent price of object storage price over the last 18 months. 451 Research believes data gravity will make object storage an increasing cost for users. Large applications requiring compute, storage, platforms, and support also increase cloud costs, because of the well-documented skills shortages, and the premium SMEs are willing to pay to support implementation of complex applications, according to the report.
Local services also gain a price boost compared to cheaper US services due to data protection legislation, particularly in Europe. 451 Research said local demand will continue to be fueled by uncertainty around Safe Harbor and Patriot Act legislation, and the new US-EU Privacy Shield agreement, as well as compliance, performance, and local customer support concerns.
A complimentary copy of the report is available from the 451 Research website.