451 Research's December Cloud Price Index falls 1.32%

Although 1.32% is meaningful, some in the industry might be surprised that it is such a small fall given the headline figures from Google and AWS.

“With all of the hype surrounding Google's cuts and AWS's restructuring, you could be fooled into thinking you might save a small fortune, but the CPI figures demonstrate that a typical application will only be cheaper by 1.5% compared with two months ago,” said Dr. Owen Rogers, senior analyst, 451 Research.

“However, extrapolate those price cuts over a year and we're looking at a 10% drop, certainly not to be sneezed at,” he added.

451 analysts believe that Google's recent price reductions were primarily driven by the need to show that it can compete with AWS and other cloud players.
The annual cost of running the CPI application spec now stands at $22,102.80. For those with longer-term needs from the hyperscalers (AWS, Microsoft Azure and Google Compute Engine), the index drops 5.5% to $1.87 per hour, equivalent to $16,381 per year – that's a savings of 18% compared with on-demand pricing, and highlights the benefit of commitment. In fact, AWS has restructured its reserved instance model to make it more attractive to enterprises.

451 analysts believe that AWS's refactoring of reserved instances is designed to make them more compelling to existing customers by increasing simplicity and addressing multiple risk profiles, rather than as a means of reducing costs, deriving publicity or growing market share. Reserved instances give enterprises predictability, guaranteed access and cheaper resources, while providing AWS recurring revenue, commitment and a view of the future.