Emil Sayegh

Apr 4, 2014

AWS, Google, and Microsoft Killing Each Other in Another Cloud War

Get Some Popcorn and watch the war of the giants.  We are betting on AWS and I’ll tell you why…


Cloud Price Cut Madness!

It’s official; a cloud price war has broken out! In a move to match pricing on Amazon Web Services, resulting from Google’s price cuts a day earlier, Microsoft has also slashed prices on several of its cloud computing services. This is all in line with price cuts happening right now across the entire industry, so expect more to come.

The Race to the Bottom-Why is this happening?

Let’s look at some of the facts here and what is really happening. Google, Microsoft, and others are cutting prices because they can’t get traction in the Cloud market except in particular niches. This battle for market share is shaping up to be a race to be the low-cost cloud leader which, as it turns out, is going to be a race to the bottom. They all have AWS envy and what all the competitors are missing is that they are not different enough from AWS to win. We wish them luck, but our bet is on AWS on that race. We’re happy getting some popcorn, a good seat and watching these guys kill each other’s margins. Have at it!

As for Amazon Web Services, they are the “big daddy” in the business and have proven to be quite a beast. They are incredibly huge, and so are their profits. For proof, just look at how their 40 percent overall price cut shows, how fat that hog has been for them all this time. Now that this price war has begun, expect more cuts and that margin will erode. This is what we have been saying all along, customers have been overpaying for AWS services that may not be the best for them in the first place. What our friends at Google, Microsoft, and Cisco are missing is that AWS’s margins has stayed near intact in all the products that are unique to AWS only: RDS, Dynamo DB, ElastiCache, Elastic MapReduce, etc. See, because EC2 is not robust enough to run real data bases, AWS forces you to use their other ancillary services, and that is where they make their profit. Unfortunately, Google, Microsoft, Cisco, since they are myopically competing on compute instances only, AWS will win the race to the bottom.

Winning means being different

What these big companies need to learn, is that to win you have to be DIFFERENT.  Business 101, right?  Google, MSFT, and now Cisco have no differentiation whatsoever from AWS in their quest to unseat AWS.  They are late to the game, and “me too” with that!  At this point, they neither have the breadth of offerings, nor the scale to match AWS across the board.  We’re looking at a pack of also-rans that have done nothing to stand out, it’s turning into the dollar store of generic cloud compute instances!

Why Codero is different:

hybrid-logoIn our case at Codero, we choose to be different by creating a substantially different approach than any of these “pure” cloud players, newcomers, no matter how big they are.  We understand that all workloads are not suited for the cloud, so we created a Cloud-like environment that allows users to spin up a real and scalable Cloud, as well as ‘bare metal servers’ in what we call On Demand Hybrid ™, which is our patented and differentiated approach.  Also, we have created a support organization and culture, that is geared to truly help customers and not a support organization that is rewarded on “service avoidance” as it is so called in these big companies.   Try finding their 800 number, or chat, or email.   Whereas, we display ours in every interaction.  You can even ask for my personal phone number, and I’ll give it to you!

This is how you compete with AWS!  Otherwise, imitation is the best form of flattery to your AWS competitor.  Have fun at that.

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  • Thank you for the article. My company has been using AWS for the past few months to stream video. We’ve found it to be very easy to use, stable, and affordable. I know Codero is also a great company — but can your cloud service compete with the global reach and resources of Amazon?

    • chandlervaughn

      Great question, Marc, and thanks for the comment and compliment. The question to ask is: Do we have to? And yes, I know that’s a loaded question, but let me explain.

      We think really highly of our friends at AWS. They’ve built some amazing technology, and I’m positive they’ll continue to do well. But in the end, they view themselves as a “platform” provider, and NOT a “service” provider. And, they holistically believe in the AWS way, or the highway.

      At Codero, we take customer service very seriously, and we believe that there is a natural marriage that needs to happen for Cloud+Dedicated Servers+Service. This is where Codero excels: Combining the best of technologies via our On-Demand Hybrid offerings and APIs, and providing world-class support services around it. We are confident (and have many customers to prove) that even the most complex configurations and the most global website presence can be serviced by Codero tech.

      Thanks again for reaching out!