The Fake Cloud Price War

ShadowBoxingIf you listen to the headlines, we’re in the midst of a major cloud price war. We’re told that the big players, Amazon, Microsoft and Rackspace, are fighting a race to the bottom.  How much cheaper can cloud pricing go?

But it’s not a race to the bottom. This isn’t a battle in the clouds, it’s a bit of shadow boxing among giants. The PR on this is very good, though, so good that even a smart guy like Ben Kepes jokes about it.

 The AWS “razor thin margins” claim

Amazon likes to talk about “razor thin margins.” Just listen to Amazon VP Andy Jassy saying that about “high margin businesses are a valid business model… … it‘s just not ours.” He further explains that “high margin“ means gross margins between 60 and 80%.  Watch below, start at minute 33:00 through 35:30:

All of that would lead you to believe that Amazon’s margins are much lower.

I calculate ProfitBricks pricing on a regular basis and it’s based on our actual cost and capex including the fact that the cost of hardware is still declining over time just as Mr. Moore predicted it way back in 1965. And sad as it is we are a little smaller than Amazon so I am pretty sure that the prices we pay for hardware, datacenter space or energy are higher than Amazon and the other big players. So here is the deal: if I were to sell our product at the same prices as Amazon or Rackspace does I would have gross margins far higher than the quoted 60% to 80%.

Sounds unbelievable? This can‘t be true? I understand your surprise.

ProfitBricks is cutting prices by 50%

How can I prove that this is actually true? First of all: as of today we cut our 1 year old pricing on cores and RAM in half for all customers, whether you’ve been with us since we launched or are joining us for the first time. Unlike the big players, we do not talk about a fake price war and fake low margins. We just act.  Our price drop is on what customers actually buy everyday, not some small service or derivative of cloud instances that have limited appeal.

In short, we are now half the price and twice the performance of Amazon, and I’ll put our technology up against any of the big players.

ProfitBricks-and-Amazon-Price-Comparison-ChartWant further proof? We have a whole site designed to show you how you can cut between 45% and 66% on your cloud computing charges by going with ProfitBricks instead of Amazon and you still get twice the speed.

Need even more proof? OK, if you’re an analyst and will accept an NDA, I’ll walk you through our actual product pricing calculations. Then you can challenge the marketing price bubble created by our competitors.

At ProftBricks we concentrate on offering just IaaS that is as good as it can be. We want to deliver on the true promise of cloud computing, with unmatched flexibility, unmatched ease of use, a pricing model that fits on the back of a business card and more than everything: the best price/performance ratio.

Try us now and soothe pain in the upcoming budgeting season.  We are Cloud Computing 2.0 for a reason – ProfitBricks is the cloud that meets the need of the post–Early Adopter market.