Is the Cloud Already a Commodity?

Ann All

You could argue that the cloud is, by definition, a commodity. (Assuming, of course, that anyone could agree on a definition of the cloud.) Companies selling cloud services use commodity hardware and software to create immensely scalable infrastructures. Unlike many other commodities, though, the cloud apparently doesn't need a critical mass of users for prices to fall. Cloud providers have sunk huge amounts into their infrastructures, and future growth should come at a smaller cost. So dropping prices to get as many users as possible on board seems like a logical strategy.


Combine this with the fact that all kinds of companies, including Microsoft, IBM and Cisco, are getting into the cloud business, and you can see why prices are dropping faster than some companies' continued resistance to the cloud. Competition drives commoditization.


As IT Business Edge's Kachina Shaw wrote last week, Microsoft lowered prices for its Business Productivity Online Suite and for Exchange Online, prompted (some speculate) by Google signing a $7.25 million contract with the city of Los Angeles to move 30,000 employees into its cloud.


So now Google is reducing the price of hosted storage for its Gmail and Picasa applications by giving users more gigabytes for less, reports eWEEK. Some price points from the article:

  • 20 gigabytes of Google storage for $5 a year
  • $10 to $15 a month for Microsoft's Business Productivity Online Suite
  • $3.50 a month for a 5 gigabyte hosted Cisco WebEx Mail account
  • $36 a year for IBM's Lotus iNotes cloud-based productivity software.


Amazon also earlier this month trimmed prices on its Elastic Compute Cloud. As Computerworld reports, charges for Linux-based instances fell from 10 cents an hour to 8.5 cents an hour, with smaller reductions for Windows-based instances.


Another reason this commoditization appears to be happening so quickly is that cloud providers largely are focusing on offering services such as e-mail, which has been a commodity longer than many of us care to remember. If you move a commodity service to the cloud, it's still a commodity.


As InfoWorld's Eric Knorr writes, "the focus has largely been on commodity services that duplicate common applications, development platforms, or server infrastructure." Knorr suggests that for the cloud to move beyond commodity status, folks will need to offer advanced capabilities that would be extremely difficult to get in an on-premise environment, like columnar databases and map-reduce distributed processing techniques, which put a mighty strain on standard, SQL-based databases. He writes:


So why not just upload your SQL data to a specialized processing service in the cloud, have the provider convert it to "NoSQL" format, and run the job in a fraction of the time it would take you?

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