Cloud computing price drops pressure on traditional equipment makers

Recently, Tencent Cloud announced the company's core products, such as http://www.aliyun.com/zixun/aggregation/13792.html "> Cloud server, Cloud database, cloud hard disk, and so on price adjustment, which cloud server decline of 53%." And in the near future, including Amazon, Aliyun, Microsoft and other large and small cloud computing companies have begun large-scale price reduction action, so that looks tall cloud computing has not yet become popular, has been plunged into the inertia of the price war cycle.

As the major IT giants of the cloud services continue to improve, the cloud computing market has entered the era of the warlords. In fact, now the public cloud [note] Market prices fight very fiercely. Google launched the new round of price wars, and Amazon later announced that it would cut the price of most cloud computing services from April 1 to 10% to 65%. Microsoft also joined the price reduction team on May 1, lowering its cloud services prices by 27% to 35%, while cloud storage lowered 44% to 65%.

Domestic cloud service providers have also been the price adjustment, March 25 Aliyun will cloud server prices down, 11 of ECS Cloud Server price reduction, the highest decline of 30%, and March 28 announced the price of the cloud storage is more eye-popping, users use more 0-500g a file straight minus 42%, is almost half as cheap as domestic peers, while database services are again 15%. Tencent Cloud just announced the price adjustment, the drop is also as high as 50 percent. In addition, China Telecom's sky-wing cloud (also from May 5 onwards, its cloud host products to carry out a comprehensive price adjustment, some specifications cloud host price reduction will be more than 40%.)

Industry insiders believe that for other cloud computing enterprises in the country, the price war means a more brutal industrial environment. If Tencent's price-cutting behavior triggers a cost war, the cloud services market will quickly become a low-margin, operational and service market. Aliyun Business General manager Chen Jinbei is forecast, the cloud service annual price reduces at least 30%-40%, every 18 months, the performance double or the price drops half, every three years price is now the 1/4-1/3.

On the other side, the declining price of cloud services has also put a lot of pressure on traditional computing equipment manufacturers. According to the Wall Street Journal, several cloud computing service companies are cutting prices, which is changing the way executives do things. These executives spend 140 billion of dollars a year on buying computers, internet lines, software and other equipment for the Enterprise Technology Center. The price war determines how companies use the calculations that are responsible for their operations, and also poses a threat to traditional computing center equipment manufacturers such as IBM, HP and EMC. For companies that think they will someday have their computing centers, the price wars are delaying their realization.

It is not hard to explain why HP and Cisco only grew during the quarter of 2013 in the fourth quarter of global server manufacturers. IBM has a recession of up to 28.9%. It has also forced traditional device makers to transform themselves into cloud services, for example, as IBM has invested about $1.2 billion trillion in expanding the global cloud infrastructure in an effort to shift the focus of its business to cloud computing, and announced a further $1 billion trillion in recent days. Cisco also plans to start offering cloud computing services to corporate customers, promising to invest 1 billion of dollars in the next two years.