Google Seen Slashing Cloud Pricing Vs. Amazon, Microsoft
The next round of price cutting in public cloud computing services could come from Alphabet ’s ( GOOGL ) Google, just as Amazon.com and Microsoft show some restraint, says a Goldman Sachs research report. Amazon Web Services (AWS), part of Amazon.com ( AMZN ) , is the biggest provider of infrastructure as a service (IaaS), where customers rent computer servers and data storage systems via the Internet. Microsoft ( MSFT ) and Alphabet’s Google are the next biggest. The new boss of Google’s cloud business, Diane Greene, will make her debut at that unit’s user conference March 23 to 24, notes the Goldman Sachs report. Greene, a Google board member since January 2012, founded virtualization leader VMware ( VMW ), which she led as CEO until she was forced out in 2008. In November, Google acquired Greene’s startup, Bebop, for $380 million. While AWS has been the biggest IaaS price-cutter of the last decade, Google Cloud Platform (GCP) has been aggressive since moving into the market. Google slashed prices in March 2014, October 2014 and May-June 2015, Goldman analyst Heather Bellini said in the report. “Another 20% to 30% across-the-board price cut from Google in 2016 would not be surprising,” wrote Bellini. “This could be announced as early as their GCP Next conference in San Francisco on March 23-24. Similar to behavior in 2015, we do not expect Amazon and Microsoft to follow suit.” Goldman Sachs says that the top three service providers are gaining share as Verizon Communications ( VZ ), Hewlett Packard Enterprise ( HPE ) and others exit the public IaaS market and focus on private clouds. Goldman Sachs estimates that AWS’ revenue will hit $12.5 billion in 2016, up from $7.88 billion last year. “If AWS surpasses $10 billion in 10 years, it would be the fastest-growing software business,” surpassing Microsoft, Oracle ( ORCL ), and SAP ( SAP ),” Bellini wrote.