Amazon Continues to Cut AWS Prices


Nov 8, 2017

Would you be surprised that Amazon has cut AWS prices more than 60 times since its launch more than a decade ago?

Amazon’s business model for their ecommerce business as well as their cloud services has been to operate efficiently and on a razor-thin profit margin. This approach has forced massive companies to take note, essentially revolutionizing both the retail and cloud computing industries.

One of the key ways that Amazon has been able to gain such a massive market share in the cloud computing arena is through their consistent price drops. In fact, in July of this year, Amazon announced its 62nd AWS price reduction. Amazon drops prices so often that they have a specific section of their AWS website dedicated to nothing but these announcements.

How can AWS prices continue to drop?

There are a host of reasons why Amazon continues to dominate the cloud computing space and in turn be able to constantly cut AWS prices. A few of these include:

  • Massive head start – Amazon has been offering cloud computing services now for more than a decade, which is significantly longer than competitors such as Microsoft, IBM, and Google. This massive jump start has allowed Amazon to gain a significant foot hold in the industry, and in turn charge lower prices due to massive scale.
  • Market share advantage – The most recent 2Q 2017 earnings numbers from the big cloud players show that Amazon continues to control more than 30% of the entire cloud infrastructure services sector. While Microsoft has seen significant growth in market share over the past year, they still only control 10% of the market, with IBM and Google trailing behind even further.
  • Proven business model – Because Amazon has been a pioneer of cloud computing, they’re confident in their approach and are therefore willing to cut costs to continue to grow their business. What’s amazing is that Amazon’s cloud computing arm produced $12.2 billion in revenue for 2016, with $3.1 billion of that being profit.

Per-second billing now gives users greater control over their resource spend

In addition, Amazon also announced billing in one-second increments (with a minimum of 60 seconds) for all Amazon EMR and Amazon EC2 Linux-based instances that are launched in On-Demand, Reserved, and Spot form. This puts Amazon’s billing model on par with Google, giving clients greater flexibility in managing their usage rates and generating significant savings now that users are not billed for the full hour. While it does not work for Windows or RHEL instances, it will allow Linux users to more closely manage their usage and spend for resources. To accomplish this detailed management, Amazon also announced that CloudWatch will support High-Resolution Custom Metrics and Alarms, enabling users to monitor custom applications and infrastructure in near real-time, down to per-second resolution.

Falling AWS prices make moving to the cloud more attractive to organizations of all sizes

Because of the significant AWS price cuts, the platform is becoming more attractive for organizations who may be looking for ways to cut costs by moving to the cloud. Replicating Amazon’s cloud computing knowledge and infrastructure is virtually impossible for most companies; and if a company could provision their own cloud servers, there’s little chance that they could do it for less money than Amazon.

Are you interested in learning more about the cost effectiveness of using AWS?

If your organization is still unsure of how best to leverage cloud providers like Amazon, it’s likely time that you took a hard look at what you may be missing out on. At CloudHesive, we’ve helped companies of all sizes migrate various tools and resources to the cloud. Should you have any questions about the process, or would like to learn more about the wide array of Amazon services that are available to growing businesses, feel free to reach out to our team today at 800-860-2040 or through our contact form.

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