Cloud migration slows as consumers call for cost reduction

The cloud has been one of the fastest-growing industries in recent years but things seem to be flatlining as a result of harsh economic times. Cloud providers are under real pressure from consumers to lower the price of their services. Amazon’s AWS grew by 27% last quarter to mark its slowest quarterly growth rate since the company started breaking out cloud sales from overall revenue.

Customers are pointing to the fact that their cloud bills keep soaring as they move more resources to the cloud despite the great efficiencies that come from operating a massive scale. A CTO of one large bank suggests the reduction of fixed charges for things such as storage as businesses scale to the cloud.

Speaking on the matter a representative from Microsoft said they are looking at the bigger picture and their efforts right now are geared toward providing the best value to customers in the long term.

“In this particular period, I think we are going to optimise for long-term customer loyalty,” Satya Nadella who is a chief executive at Microsoft said.

Microsoft’s cloud revenue grew by 42% before the effects of foreign exchange. It’s growth but it was a point below expectation.

Amazon has acknowledged the need for reduced prices for its consumers and has been working on its own chips to replace third-party components. AWS can save money by moving its workloads to Amazon’s proprietary chips. The company has already started manufacturing processors and accelerators for faster machine-learning calculations.

Amazon is also offering discounts to customers that use its data centres for business but this comes at the expense of smaller cloud providers.

“Customers who lean in with AWS on larger, longer-term commitments tend to enjoy the best economics,” said Elizabeth Baker, vice president of AWS global deal strategy and programs.

That said, even as consumers push for a reduced cost, they are at a disadvantage due to the lack of competition in the cloud industry.

Amazon, Microsoft, and Google continue to dominate the market giving them the power to dictate the market prices.