In analysing the variances in Cloud pricing across the world, US pricing remains the most competitive globally compared to Europe, Asia Pacific and Latin America regions.
Cloud findings from 451 Research claim that compared to the US, users on average pay between seven per cent and 19 per cent more to host the same application in Europe and 14 per cent to 38 per cent more in Asia Pacific, depending on the complexity of the application.
Latin America is the most expensive region - 38 per cent higher on average than the US with a far greater variation in prices, in part because it has the most limited selection of providers.
Reflecting global pricing cuts from AWS and Microsoft in early 2016, 451 Research also announced that the Cloud Price Index has dropped by six per cent since October 2015.
While this is good news for users, 451 Research analysts note that it is “nowhere near” the double-digit drop that many users might expect given recent headlines.
“When evaluating cloud providers, enterprises should consider how they will take advantage of variances in prices in the short and long-term to cut costs,” says Dr Owen Rogers, Research Director of Digital Economics Unit, 451 Research.
“This means being aware of the real impact of price-cuts and understanding geographical differences.
“We found one provider charged more than twice the average US price for hosting in Latin America, whilst another offered an 11 per cent percent discount for hosting in Europe compared to the US.
“The global market for Cloud is complex and Cloud buyers need to understand typical pricing to properly evaluate their options and negotiate with suppliers.”
451 Research’s index measures the price change across a range of cloud services, and encourages buyers to consider the costs of all their cloud services, not just virtual machines.
For example, the Cloud Price Index object storage price has remained at the same level for 18 months, and, because of data gravity, 451 Research believes this will become an increasing expense for users.
Despite the average premium pricing outside the US, 451 Research’s study unearthed one cloud provider that bucked the trend by offering services in Europe and Latin America that are cheaper than average US prices.
“The range of costs reflects a higher premium for large applications, composed of compute, storage, platforms and support, compared to simpler virtual machines,” Rogers explains.
Consequently, 451 Research analysts believe these discrepancies are due to skills shortages, compounded by an SME market willing to pay more for support when implementing complex applications.
“CIOs pay a ‘protection premium’ to use in-country or in-region services - rather than the cheaper option of US services - to ensure compliance with local regulations; to improve performance by bringing applications closer to users; and to take advantage of local customer service,” Rogers adds.
In Europe specifically, Rogers believes the biggest driver of local Cloud demand is data protection legislation.
“Uncertainty about who has access and who has responsibility for data is confusing Cloud buyers and service providers alike,” he adds.
“Local demand will continue given the uncertainty around legislation including Safe Harbor, the Patriot Act and the new US-EU Privacy Shield agreement.”