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Competition in public cloud market prompts price reductions, new research finds


The average cost of taking up cloud computing services has fallen by 66% in the last two years, according to new research by a telecoms research and consultancy business.

Tariff Consultancy said the price reduction could in part be attributed to "the intense competition between public cloud computing providers" as well as "the rapid product innovation that is taking place among the key worldwide platform providers".

More businesses are now using cloud services as a result of the lowering cost of those services, Tariff Consultancy said.

"Cloud services are now being used by enterprises across a range of their critical applications," Tariff Consultancy said. "Although enterprise cloud adoption differs significantly by country – according to a Eurostat survey of the EU-28 countries published in 2015 for example, Italian businesses have a cloud penetration rate of 40%, but German businesses by contrast have a reported cloud penetration rate of 12%."

"The cost of introducing private cloud services is also falling, which is encouraging the large enterprise to adopt a hybrid cloud infrastructure," it said.

Tariff Consultancy said that pricing for using public cloud services "is now relatively stable" and that cloud computing providers will increasingly compete with one another on "service innovation, not price".

"Cloud providers are introducing analytical services available for cloud computing applications and are now offering cloud for the emerging internet of things (IoT)," Tariff Consultancy said. "New cloud services are being introduced to cater for specialised customer requirements as a means of avoiding price commoditisation."

Tariff Consultancy said it expects the average cost of using public cloud services to fall by 14% by 2020 but anticipates "less intense price competition over the period". It also forecast "that revenues for public cloud services will increase rapidly over the same period by more than three times" and reach $82 billion by 2020.

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