These 2 Companies Are Losing the Cloud Price War

Grazed from Fool. Author: Timothy Green.

The cost of cloud computing is rapidly declining, and for the past few years, Amazon (NASDAQ: AMZN) has been dictating the pace of this decline. Microsoft (NASDAQ: MSFT) has been matching the price cuts of Amazon, ensuring that its Azure cloud is competitive, but Amazon has always led the way.

With Google’s (NASDAQ: GOOG) (NASDAQ: GOOGL) recent slashing of its own cloud computing prices, Amazon was forced on the defensive, cutting prices reactively instead of proactively. This marks an important shift, and the cloud computing price war now ensuing will certainly lower the margins of all companies involved. Smaller companies like Rackspace (NYSE: RAX) will be hit the hardest, but of the big three, Amazon will be hurt more than the rest…

An expensive game to play

Building out the massive data centers required to offer cloud computing services is an extremely capital intensive proposition, and this can be seen by looking at the capital expenditures of the largest cloud computing players. Amazon has ramped up spending dramatically over the past five years, spending more than $3.4 billion on capital expenditures in 2013. This compares to just a few hundred million dollars in 2009…

Read more from the source @ http://www.fool.com/investing/general/2014/04/09/the-biggest-loses-in-the-cloud-price-war.aspx

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