Amazon AWS, Microsoft Azure, Google Face Cloud Pricing Pressures
At first glance, spending on Amazon Web Services (AWS), Microsoft Azure and Google Cloud apparently surged amid the coronavirus pandemic — and the associated work from home (WFH) boom. But take a closer look, and the public cloud services boom also faces some pressure on certain fronts.
Indeed, public cloud service providers (CSPs) are facing “requests from many customers for financial relief, while others are cutting their cloud spending,” according to The Information. It’s somewhat akin to pricing pressure in the managed IT service market market, where some MSPs are asking their software, SaaS and cloud providers for price adjustments and/or delayed billings for certain services.
Cloud Pricing: Signs of Flexibility?
The apparent fallout so far for major CSPs:
- Some Cloud Pricing Pressure: So far, AWS has been the least willing to offer flexible terms on customer bills, while Microsoft Azure and Google Cloud have shown some pricing flexibility, The Information report says.
- Some Vertical Market Cloud Shrinkage: Moreover, don’t forget that many U.S. industries — particularly airlines, hospitality and food service — have essentially gone dark during the pandemic. That likely means associated cloud spending among those verticals has plummeted, ChannelE2E believes.
- Some Startup Shrinkage: Money-losing startups may also face falling revenues — and therefore, reduced need for cloud services. ChannelE2E has warned several times that startup implosions could someday threaten cloud services revenues.
Still, certain sectors are booming — especially anything that’s related to online shopping, e-commerce, home delivery of goods, and Work From Home IT management.
Public Clouds: Growing — But How Quickly?
The overall result for AWS, Azure and Google Cloud likely involves a major net gain for those respective services. But how much cloud growth actually occurred in Q1 2020, and has pricing pressure emerged in April 2020?
We’ll likely get the answers this week when each of the major cloud providers announces quarterly results. Stay tuned for quarterly financial statements from Google parent Alphabet (April 28), Microsoft (April 29) and Amazon (April 30).