Currently, the cloud computing industry brings huge profits for technology companies. However, the race of the giants in this sector is causing many people to worry.
It is the race of zero with very simple content: Free everything of cloud service, in which cloud storage will be the first one not to be charged. This is a dangerous game since it means that only the largest companies, with the most powerful budget and effective business that can stand in the world of cloud computing.
Why do technology companies have to run after this race? There are many reasons to explain this, but the launch of Amazon is the main reason why more and more consumers are using cheap cloud services. Amazon has discounts for its cloud service very deep. By the end of 2014, Amazon’s service has declined to 47% compared to the launch 6 years ago. In return, Amazon chose to increase revenue by having more customers and providing attractive services. Therefore, even if the service price came down, customers still spent more. Basically, Amazon’s cloud service is like a retail store. You are willing to pay more if you get promotion in any items you have just bought.
However, in 2015, Google has taken a step further. Instead of pursuing competitive price of Amazon, Google even provides a much cheaper price. It is free.
Google is not the first to offer free unlimited photo storage service, Amazon also done the same thing a few months ago. However, Amazon’s service package is only for those with Amazon Prime or Kindle Fire. Meanwhile, Google Photo will be available on both devices running Android and iPhone, which means that 90% current smartphone market. As for Microsoft, they also started the race of zero. This firm provided unlimited storage for anyone registering Office 365. However, this does not mean completely free since the Office price is 70 USD per year.
The dynamic of large technology companies showed, one day, all storage services would be free. Not only large corporations, but the small businesses like Dropbox or Box also have to do this. Currently, when the race of zero is still ongoing, the companies provide hosting services are constantly cutting their fees.
To offer free storage service, companies must find ways to supply more special cloud services as well as individualize their products. Box, for example, provide additional security service for the file system, a service that many companies prefer to ensure they adhere to moral law. Box also builds other applications related to project management, document management, and special applications to help users work with data rather than simply store and share them.
There are also some units refusing to follow this race. Cisco’s project leader has decided to spend $ 1 billion to invest on cloud computing last summer. Several other major companies such as IBM or Oracle also said they would not reduce their prices to compete. For them, this race is very dangerous. Even when storage cost is declining, overall costs to run data centers are still very high. The more users, the more you have to expand data center and pay for management, energy cost and other issues. IBM has recently invested $ 1.2 billion for the construction of a new data center system.
Therefore, a new formula: Spend billions of dollars to build a data center and deliver services with increasingly lower prices, then try to figure out additional services attractive enough for companies to pay more. Perhaps in the near future, only Amazon, Google and Microsoft can follow this strategy.