Pay-as-You-Go Cloud Computing Poised to Shake Up the Industry

May 20, 2016

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A short time ago, cloud computing was a resource that was only taken advantage of by organizations that could afford to virtualize and manage their hosted platforms. Nowadays, many businesses, including startups, are using cloud computing for their organization’s primary computing functions. As this enormous shift happened, many of the world’s largest companies have pushed their cloud platforms forward to offer secure storage, software deployment, and even communications for organizations that are either just starting out, or are looking to reduce their capital computing and support costs.

Ever the innovators, many of the Internet’s giants have begun introducing new cloud pricing models that actually charges customers by the amount of computing they use, rather than relying on service agreements that bind them to a certain service plan. While this shift is only currently being undertaken by Amazon, Microsoft, Google, and a handful of the other large software developers in the world, it is easy to see how it can be a much more sustainable system than the service offerings that are offered today.

Providers: Maximize Profits with Advanced Usage Tracking
For cloud providers, the boom in cloud computing took a fair amount of time to happen. Platforms like Salesforce utilized cloud computing by giving customers access to all of the software through a relatively simple-to-use web interface. Amazon Web Services (A.W.S.) took it to the next level a couple of years later when they developed and deployed a set of services through their web-based interface. These services, such as, data storage, computation, and support, provided organizations the computing resources they need at a price point that made sense for their bottom line. The access from anywhere was the biggest selling point, and allowed early commercial cloud platforms to find success.

A few years later these service packages started to pop up everywhere. You had data storage, infrastructure, development platforms, software; basically any type of computation you needed for your business, available by entering a service agreement with the vendor of your choice. As many more companies begin to offer cloud computing packages, the larger corporations that have long-been offering these technologies begun to look at how to get the highest profitability out of their cloud platforms. Of course, raising their prices could work, but may be counter productive with the immense supply of cloud providers now available.

Instead of increasing the price and risking losing customers, A.W.S., Microsoft, and Google are all going to a “serverless” cloud computing pricing model. This means that instead of paying for a service package for your organization, you will pay for how much you actually use the platform. It is basically a toll-based system. For every million times code is run, the customer is charged a certain amount, say a penny. The amount of math at play here is staggering, but how do you think this pricing model stacks up against current cloud service prices?

Consumers: Actually Pay For the Cloud YOU Use
Consider for a minute that there are multi-million individual “transactions” made daily by the users of an organization. Every time a customer runs code, it is thought of as a transaction. If you have the sophistication to track this information over networks, you can set up a truly fair pricing model. Organizations that use more computing will pay more, while organizations that use less will pay less. By implementing this demand-latent manner in which to collect fees, these extraordinarily large companies will inevitably take over a larger share of the cloud industry. Demand for cheaper computing, no service contracts, and reliable support is more pressing today than it has ever been.

This innovative way to push the limits of this technology forward isn’t without its naysayers; and, in this case, there are sure to be many. Not much has been made about this shift in pricing, as not many platforms have implemented it. As these analytics systems become more proficient, however, you will likely see cloud providers that simply cannot compete with this pricing platform. By offering their own modified system, one that will allow them to take advantage of the price trend without gouging their loyal customers for more money, companies may yet hang on to their market share.

Cloud growth has been substantial and changed the way people think about the acquisition of computing resources. With the new pricing model that the big providers have, it’s clear that the next innovation for cloud computing is to implement a true pay-as-you-go system. To learn more about the latest cloud computing innovations, or how to leverage hosted computing for your business, call us today at (610) 828- 5500.


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