Amazon S3 Cloud Service Cuts Prices as Market Expands

By | Feb 9, 2012

Massive providers with huge data centers are no longer the only ones who can play in the cloud. Not only are start-ups generating more money than ever for public and private cloud provision but recent price drops in options such Amazon S3 reflect an effort by big cloud business to draw in midsize companies looking for an affordable cloud solution.

Aggressive Price, Small Division

Although Amazon's Internet services division represents a small part of the company's overall revenue, it's seen as having long-term value, according to a February Wall Street Journal blog entry. Despite their small size relative to other parts of the Amazon juggernaut, S3 and EC2 have earned the company a reputation for reliability and according to Forrester Research principal analyst Frank Gillett, "[Amazon is] widely regarded as a leader in the [cloud computing] space."

Amazon's Internet services division has lowered their prices 17 times in five years, with five of those for S3. Recent cuts to S3 data plans mean a saving of over 10% savings for businesses on their first 500 terabytes of storage used for media hosting, file backups and analytics data storage. Such a move is not uncommon for the online giant, which favors volume and aggressive pricing and continues to outperform many similar retailers in the same market space. The amount of data stored in S3 almost tripled in 2011, marking its fastest year of growth since 2006, but with more cloud computing start-ups offering similar services, the road ahead for Amazon may be bumpy.

New Cloud, New Money

A recent series of articles at CloudTweaks examines the recent upswing in cloud start-ups, along with the significant amount of venture capital (VC) being invested in many fledgling companies. San Francisco-based AppDynamics, for example, a "platform for IT teams to manage the operational complexities of cloud-based application architectures," raised over $36.5 million and already has more than 50,000 customers. Shopkeep.com, a smaller POS start-up, was able to raise 2.2 million to fund development of its mobile apps and serve over 1000 customers.

Many start-ups fall into niche categories and won't challenge companies like Amazon or VMware for domination of the cloud space--at least not yet. IT professionals at midsize businesses are familiar with the offerings provided by Amazon S3 or EC2, and a price cut may help make such services even more attractive, but the market is rapidly changing, as shown by the confidence of VCs in supplying investment dollars. Already-established cloud architecture from companies like Amazon along with a lowered bar for entry into the world of cloud computing mean start-ups have the opportunity to not only provide niche, business-focused services but develop rivals to even the clouds of tech giants. In the cloud, it's not how much space you take up, but high you go, and many start-ups are heading rapidly skyward.

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet.

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