5 cloud computing trends that will be big in 2013

By Bernard Golden, CIO |  Cloud Computing

The recent tit-for-tat storage price battle between Google and Amazon, key to the first AWS Re: Invent conference, is just a warm up for 2013. Next year will see ferocious price competition as CSPs attempt to blunt Amazon's growth. Even those that have heretofore eschewed price competition will have no choice but to jump into the fray.

For example, Hewlett-Packard, which not that long ago said "the notion of just standing up a VM for raw compute is kind of done" and promoted the importance of a cloud ecosystem, this week launched its OpenStack-based cloud service with a pricing structure that undercuts Rackspace by a third. That's not exactly the mark of a provider focused on value-added services.

We'll see plenty more of these price wars as CSPs recognize platform wars are a market share land grab. The winners turn into monopolies and the losers slink off the field. However, as Warren Buffett so memorably says, "Only when the tide goes out do you discover who's been swimming naked." Translation: pricing wars are going to show who's really prepared to be a volume player in cloud computing.

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Next year, cloud providers will come to understand that cloud pricing is a marginal cost-yield management exercise; efficient design, low-cost operation and, crucially, high utilization are fundamental to success. Land grab economics favor CSPs with access to significant capital. Expect those with access to pursue that advantage. It's no accident that Amazon recently sold $3 billion in bonds. It's arming for the battle.

One can expect real dislocations in the CSP industry as players have to rethink their business plans based on lower revenue streams, including some who conclude that being a cloud provider is a never-ending money pit and decide to exit the industry. We've already seen a couple of departures: the high-profile GoDaddy and the lesser-known Harris, which exited after reportedly spending $100 million on a cloud infrastructure.

They won't be the last. Look for a real bloodbath in the CSP industry next year-but realize that, for customers, this bloodbath will pay enormous dividends in lower costs.

4. Hybrid, Heterogeneous Cloud Computing Comes to the Fore


Originally published on CIO |  Click here to read the original story.
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