Clouds aren’t worth the price, ProfitBricks says
August 8, 2013
Grazed from FierceEnterpriseCommunications. Author: David Weldon.
Don’t kid yourself that cloud computing prices are justified, despite recent pricing gouging. That is the claim of cloud hosting company ProfitBricks, which this week lashed out at rivals for misleading customers on their pricing strategies. Andreas Gauger, founder and CMO of the German-based ProfitBricks, blogged this week that his company would cut its cloud services fee in half, making his service as cheap to use as Amazon, according to a report in CloudPro.
Gauger said ProfitBricks is slashing prices for CPU core and RAM, with single-CPU core server prices cut from 5 cents per hour to 2.5 cents per hour. Despite recent reports about Google and Amazon dropping their cloud computing rates, Gauger says those rates are still hiding huge profit margins. "So here is the deal: If I were to sell our product at the same prices as Amazon or Rackshare does, I would have gross margins far higher than the quoted 60 percent to 80 percent," Gauger said…
According to Gauger, "I calculate ProfitBricks pricing on a regular basis and it’s based on our actual cost and capex including the fact that the cost of hardware is still declining over time, just as Mr. Moore predicted it way back in 1965." No doubt conscious of recent pricing wars between Google and Amazon, Gauger said customers could get twice the speed on his site, at 45 percent lower cost, than by obtaining cloud services at Amazon…
Read more from the source @ http://www.fierceenterprisecommunications.com/story/clouds-arent-worth-price-profitbricks-says/2013-08-07