Exploring OOW London Delegate Questions: “What happens when they raise the prices?”

Vic Milne 22-Jan-2019 12:02:54

I was asked this, not for the first time, at Oracle Openworld.  Typically I’ve seen the question raised about all Cloud providers: you migrate and then WHAM they hike the prices and there isn’t anything you can do about it.  We seem to be living in a state of fear!

I thought this topic worth a blog post as there are many aspects to it.  To begin with, let’s explore the economics of Cloud and the market.  Within the last five years we’ve gone from one main public Cloud provider to many.  That means we’ve gone from a competitive vacuum to a competitive market.  One of the things this is naturally going to trigger is price competition; as the Public Cloud providers battle for market share, one of the key drivers for the consumer will be price.  Price will be driven down by virtue of the competition.  In fact, price has already been driven down due to competition.  This is great for Public Cloud consumers.

Public Cloud is about economies of scale and all major Public Cloud providers are increasing their infrastructure footprint.  This allows them to provide services on a huge scale which drives down the unit price of those resources.  All Cloud providers are reporting record investment in Cloud infrastructure; this is also great for the consumer, as we can benefit from these economies of scale.

The other element that this plays into is ‘lock-in’.  For me ‘lock-in’ isn’t a particularly useful phrase or one that realistically helps organisations make the right decisions; it’s really used to make the individual not do something due to the fear of being locked in.  Any decision that requires companies to make investments in either TIME or MONEY has an element of lock-in.  What happened to the word technology investment?  If you find yourself in a situation in which you wanted to move out of a Public Cloud due to the cost then the higher up the ‘as a Service’ stack you go, the longer it may take.  Data Egress costs are another factor, and the final element that I will touch on today, and these vary between Public Clouds.  When you’re looking at lock in, I think an interesting thing to note is that for the likes of traditional enterprise software companies (Oracle and Microsoft) they were never born in the Cloud, which means they have the most transportable and flexible software that can run on ANY public Cloud or in-house infrastructure.

If you’re worried about moving to Public Cloud then take reassurance that we are in a growing, evolving competitive market.  Services migrations and offerings will only become easier and costs will most likely go down.