Are cloud price hikes a harbinger of the future?
July 19, 2015
Grazed from CIO. Author: Bernard Golden.
Last week, blogger Aidan Finn posted an excerpt from a Microsoft email announcing 13 percent price hikes in the European region. Reaction from the trade press was immediate, predicting that this action presaged ongoing price hikes.
Barb Darrow of Fortune, in her piece titled “Surprise! The cost of cloud is about to rise” said “Companies spoiled by round after round of price cuts on cloud computing services over the past year or so had better gird themselves for change.” David Linthicum, SVP at Cloud Technology Partners, in his blog titled “The era of ever-cheaper cloud services is over” went on to say:..
I suspect we’ll see some more price increases in 2015 and 2016, for the simple fact that cloud providers are under pressure to make actual money, not simply gain market share. The margins are likely razor thin, so price hikes are the only way to increase cash flow now that the demand is on a path of steady growth. As cloud providers lock in customers, they are bound to raise prices, much like large enterprise software providers have done for enterprise licenses…
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