Comparing Cloud Computing Prices

During our research we have recently come across an interesting blog with the title “The Case for a Cloud Computing Price War”, where the author  Daniel Berninger argues that Amazon has kept prices for its EC2 offering stable over years, without handing over price performance improvements to its customers. The article further on argues that prices for cloud computing offerings are extremely hard to compare with up to 10x times difference between the least and the most expensive cloud computing offer.

In order to resolve this issue,  the site offers  a cloud price calculator that simply takes computing power (in ECU), memory (GB), storage (TB), bandwidth (TB) and price ($) as input and calculates a so-called cloud price normalization index (CPN). This index simply is the arithmetic sum of memory, storage, bandwidth  divided by price. It can be interpreted as “calculation power per dollar”. This simple approach certainly makes the offers somehow comparable. What remains really is the question, if all those factors can be treated equally and if  more memory can compensate for less storage.  To our opinion such a calculation has of course some meaning, but if the imput factors to the calculation can be treated equally or not really depends a lot on the business context. What is also missing of course is the fact that this model is not applicable to other cloud computing offers (Microsoft’s Azure and Google Apps) that simply cannot be broken down into memory, storage, bandwidth and price.

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About Georg Singer

Georg Singer is an analyst at the University of Tartu in Estonia. He works for the institute for computer science on cloud computing economics.

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