APAC is third most expensive region for public cloud

Networks Asia staff
Networks Asia

The US is the cheapest market for the public cloud, according to 451 Research’s latest Cloud Price Index report which analyzes the variances in cloud pricing across the world.

The findings show that US pricing is the most competitive globally while users pay, on average, between 7% and 19% more to host the same application in Europe and 14% to 38% more in Asia-Pacific, depending on the complexity of the application.

Latin America is the most expensive region – 38% higher on average than the US with a far greater variation in prices, in part because it has the most limited selection of providers.

Reflecting global pricing cuts from AWS and Microsoft in early 2016, 451 Research also announced that the Cloud Price Index has dropped by 6% since October 2015. While this is good news for users, 451 Research analysts note that it is nowhere near the double-digit drop that many users might expect given recent headlines.

451 Research’s index measures the price change across a range of cloud services, and encourages buyers to consider the costs of all their cloud services, not just virtual machines. For example, the Cloud Price Index object storage price has remained at the same level for 18 months, and, because of data gravity, 451 Research believes this will become an increasing expense for users.

Despite the average premium pricing outside the US, 451 Research’s study unearthed one cloud provider that bucked the trend by offering services in Europe and Latin America that are cheaper than average US prices.

The range of costs reflects a higher premium for large applications, composed of compute, storage, platforms and support, compared to simpler virtual machines. Analysts believe these discrepancies are due to skills shortages, compounded by an SME market willing to pay more for support when implementing complex applications.

CIOs pay a ‘protection premium’ to use in-country or in-region services – rather than the cheaper option of US services – to ensure compliance with local regulations; to improve performance by bringing applications closer to users; and to take advantage of local customer service.

legislation including Safe Harbor, the Patriot Act and the new US-EU Privacy Shield agreement.

Dr. Owen Rogers, Research Director of 451 Research’s Digital Economics Unit and the report’s author commented, “When evaluating cloud providers, enterprises should consider how they will take advantage of variances in prices in the short and long-term to cut costs.”

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