50% on S3? AWS Helping Google Into the Game or Stopping the Cloud Race to Zero?

Screenshot_228One day after Google announced a substantial price reduction for their cloud services, Amazon announced their own dramatic price reduction on several AWS offerings. This move will reduce the revenues of one of Amazon’s most profitable services, the S3, by about 50%. What were the AWS leaders thinking just before Andy Jassy went on the SF summit stage?

This decision raises a few questions about Amazon’s market strategy. Why would a leading company willingly cut their successful stream of revenues so suddenly in light of a new competition? Aside from the profit loss, Will this move – stop the IaaS vendors’ race to zero? will it position GCP a notable player in the cloud arena, as AWS largest direct competitor.

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Ravello Systems: The MVNO of Cloud

Ravello Systems LogoThe cloud market is young, despite AWS’ growth and current worth of a few billion dollars. Most of the enterprise’s IT resources are still hosted on the organizational premise of using VMware hypervisor. The enterprise hybrid cloud challenge is hidden in the cloud utility model’s basic notion of hardware as software, whereas legacy application performance and usages are still based on physical resources capabilities. This difference is the greatest factor when it comes to discussing the evolution pace of the `enterprise grade cloud`. The CIO today is required to show cloud adoption and IT operations’ efficiency. This is consequentially triggering new startups to evolve in efforts to facilitate IT resources to close this existing gap. What follows is a story of such a startup that, in my opinion, has a real chance at becoming a leader in this intermediary cloud adoption phase and the hybrid cloud ultimate enabler, Ravello Systems.

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Consumption, Utilization and Elasticity: Cloud Basics

newvem cloud utilization heatmap
Cloud Utilization Heatmap by Newvem

Lets start with a basic scenario where there is a sudden peak in the demand for an application service as the amount of clients’ requests increase. This event leads to a direct and immediate impact on the load placed on the web servers that host the service. In the traditional world, the number of servers is fixed, therefore an overload adversely affects the application performance and the service may slow down or even be terminated. The IT team would want to restore the environment functionality and bring the service up as soon as possible. The immediate impact  of such an event on the business can be devastating. Starting with this simple understanding, we can move into the world of cloud computing use including resources consumption, while relating to the key differences between the traditional data center and today’s cloud technologies.
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