After an initial euphoric rush to the cloud, administrators are questioning the value and promise of the tech giant’s services.
According to a report published by UK cloud outfit Civo, more than a third of organizations surveyed reckoned that their move to the cloud had failed to live up to promises of cost-effectiveness. Over half reported a rise in their cloud bill.
Although the survey, unsurprisingly, paints Civo in a flattering light, some of its figures may make uncomfortable reading for customers sold on the promises from hyperscalers. Like-for-like comparisons for a simple three-node cluster with 200 GB of persistent storage and a 5 TB data transfer showed prices going from $1,278.58 in 2022 to $1,458.68 in 2024 on Microsoft Azure.
For Google, the price went from $1,107.61 to $1,250.35. According to Civo’s figures, the cost at AWS increased from $1,142.46 to $1,234.59.
“The Kubernetes prices were taken from the hyperscalers’ very own pricing calculators,” a Civo spokesperson told The Register.
In the IT world, there is an expectation that bang for buck increases as time goes by, but in this example, prices are rising faster than the rate of inflation, and what customers receive for their money remains unchanged.
John David-Lovelock, VP analyst at Gartner, said CIOs had been conditioned not to expect price increases since the cloud emerged.
“Cost control, based on operating datacenters at massive scale, was part of the early sales pitch and in the intervening 15 years, it had proven out – cloud product costs were stable, and either went down in price or more features were added at the same price,” he told us.
“However, the rapid rise in the cost of electricity post-pandemic, coupled with the rising cost of skilled IT staff, put cloud delivery under new cost pressures that had to be passed on, from hyperscalers to platform provider, from platform provider to software provider, and finally from software providers to clients.
“While there are cost pressures behind these increases being felt across the cloud spectrum, opportunistic price increases cannot be ruled out.”
Microsoft and Google decided not to officially comment on the survey’s findings. However, a representative for one of the hyperscalers retorted that the figures seemed cherry-picked and pointed out that, as an example, customers using reserved instances could realize significant savings.
In response to the suggestion that the figures had been “cherry-picked,” a Civo spokesperson said: “The configuration we used – a three-node cluster with 200 GB Persistent Volume and 5 TB data transfer – is one we’ve found to be commonly selected by our diverse customer base. While we understand that no single setup can represent every use case perfectly, we believe this configuration offers a helpful reference point for many potential customers.”
An AWS spokesperson sent us a statement: “IT providers often tout their pricing in direct comparison to AWS, which encourages further price competition. AWS has reduced prices 134 times since AWS launched in 2006.
“These price reductions have occurred even as AWS has continuously improved reliability, availability, security, and performance. In addition, AWS offers management tools that make it easier for customers to monitor and optimize their cloud costs.”
Despite such protestations, analysts have long predicted an increase in public cloud prices. In 2022, Canalys warned that prices could jump by a third, and several companies have begun to question the cost of operating services in the cloud compared to running on-premises.
But is a retreat from the cloud likely? David-Lovelock thinks not: “CIOs cannot turn their back on cloud.”
The giddy enthusiasm might have waned in favor of some hard-nosed ROI calculations, and some workloads might jump away from cloud vendors, “but this will not constitute a change in direction – just a ripple in the stream of dollars flowing to the cloud.”
So, are prices increasing? The answer has to be yes. How much of those rises are down to the major vendors opportunistically adding of a few percentage points versus an increase in fixed costs, such as electricity, is pretty much irrelevant. The advice remains the same: the cloud is here to stay although its luster has dulled over time.
Time, then, to wheel out the ROI calculator and ensure there’s been no stealthy vendor lock-in. All clouds and all workloads are, after all, not created equal. ®