Commoditization has always been there cloud computing

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Unformatted text preview: n to be broad and deep. (Commoditization has always been there – cloud computing is only one of its newest faces.) IaaS will remain a low-margin business based on commodity hardware and software, although many vendors will raise prices along with quality of service (QoS). PaaS vendors will boost prices based not just on QoS, but also on the breadth, depth, and ease of use of their development and runtime services. As a result, the PaaS market will not experience the same level of commoditization-driven price war as the IaaS market. From a pricing point of view, SaaS is much more open than the 14 S TRAIGHTTALK I T IaaS and PaaS markets, as it features a wider range of niche segments, and SaaS vendors are increasingly moving their focus from low cost to added value. However, SaaS price rises are kept in check by the increasing competition between SaaS vendors as well as by incumbent on-premise software-centric ISVs (such as Microsoft) entering the SaaS market. Many believe that public cloud services are engaged in a race to the bottom that will depress prices and profitability across the IT industry Towards more price transparency – within limits Price transparency is part of the ease of procurement of a PAYG approach: in order to be available, on-demand service vendors need to provide easy access to pricing information. As a result, IaaS and PaaS pricing and licensing schemes are much easier to find and provide more granular information than SaaS or on-premise software vendors. However, SaaS vendors are likely to open up – and simplify – as they move towards a PAYG approach to pricing. On the other hand, in the IaaS space (with the PaaS and then SaaS markets likely to follow), public cloud service providers are expanding from PAYG pricing schemes in a variety of directions. Amazon Elastic Compute Cloud (EC2) is a good example. It started with a straightforward on-demand PAYG scheme and then, in 2009, added: ■ reserved pricing (March), which enables customers to reserve compute resources for important applicati...
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This document was uploaded on 12/31/2013.

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