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Cloud Computing: Bezos’ Law isn’t Working?

By Dick Weisinger

First there was Moore’s law, the complexity and computing power of hardware doubles every two years.  Then, in 2014, Greg O’Connor, former CEO of AppZero, in a post on GigaOm proposed a similar law for Cloud Computing and called it Bezos law:  “over the history of the cloud, a unit of computing power price is reduced by 50 percent approximately every three years.”

So cloud computing prices should be dropping dramatically, but a study by Erik Lu at Kapwing found that wasn’t the case.  Lu compared cloud computing and storage prices from Google and Digital Ocean and found that prices have been steady over the last three to four years. Lu comments that AWS prices were last changed in November 2016 and saw no price reductions throughout 2017. Lu writes that “the idea that new companies will emerge as a result of dropping cloud costs isn’t supported by the data.”

Interesting.  But Bill Supernor, CTO at KoolSpan, rebuts the case presented by Lu and looks at historic numbers on AWS pricing.  He in fact does find a fairly dramatic drop in Amazon compute pricing which averaged 58% every three years.  Supernor comments that “for the full view of cloud compute cost trends, we need to look at both the cost of specific instance types, and the continually evolving generations of that instance type. When we do this, we can see that the cost of cloud computing is, in fact, dropping dramatically…at least on AWS.”

Maybe this explains why Google’s cloud effort is struggling.


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