Price Wars Parallels Between Airlines and the Public Cloud
In the last couple of months, the three largest cloud providers – Google, Amazon Web Services and Microsoft each announced substantial price cuts. This is a serious price war. This time, Google initiated it, with AWS and Microsoft quickly following.
All these price flurries are very similar to the U.S. airline industry, whose members constantly match price cuts that any airline makes. The net result of the airline price wars is that flying has never been cheaper, but every other aspect of flying has suffered: poor service, overbooking, and add-on fees.
With this the economics of being a cloud provider could become problematic. Smaller cloud providers, like in the airline industry, have a couple of choices: provide a niche service that lets them be profitable but remain small, or be bought up as consolidation ramps up.
Could we see a similar phenomenon in the cloud computing industry, which appears to have a lot of parallels with the airline industry in terms of obtuse, dynamic and complex pricing, add-on fees and differences in services?
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