Will Cloud Cost Decrease In 2021?

COVID-19 pandemic has pushed businesses to make immediate transitions into digital functioning. One critical transformation of this digital journey has been the adoption of cloud technology. The increase in cloud adoption and applications has been so prominent that studies speculate an increased investment in cloud computing services, with the market expected to grow 18.4% in 2021. It also suggested that the cloud market is expected to be worth $304.9 billion in 2021, up from $257.5 billion in 2020.

With an increased focus on remote working and the need to bring a secure working environment, investment in the cloud has been the way forward for industries. Cloud models are turning out to be a cost-effective way to ensure business continuity and help them with rapidly accelerating their digital business transformation plans. Many experts even claimed that cloud adoption is crucial to lead organisations into the new normal. 

Multi-cloud approaches, adoption of AI to improve efficiency and speed of cloud adoption, increased adoption of hybrid cloud are some of the trends that we are expecting to see in the cloud space. Companies really must switch from a gradual multi-year cloud-first approach to a much quicker “cloud-now” mindset, Isaac Rajkumar of OpenText had said in an interview with Analytics India Magazine. 

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Increased Cloud Budgets In Organisations

As 2021 expects to see enterprises shifting towards the cloud, their cloud budget may see a significant increase. Cloud initiatives will amount to 70% of all IT spending in 2021. With a 30% growth being modestly forecasted and the rapid adoption in recent times along with large investments made by several organisations in this market augurs well for the Indian Cloud Implosion at a highly competitive price point. “The increased use of public cloud services has reinforced cloud adoption to be the ‘new normal’,” says Sudhir Kunder, Sr. VP, and National Head, DE-CIX Interwire India. 

On the other hand, cloud service providers are ramping up their offerings to meet the demand while providing unique offerings to the end-users. The major cloud providers are in the process of shifting focus to industry-specific cloud platforms with solutions for industries such as media, BFSI, manufacturing and distribution, government, etc. Even industries such as healthcare are witnessing a spectacular increase in cloud adoption.

Looking at these growing demands and choices that the end-users have, we can expect cloud providers to create more solution-driven and customised services at highly competitive prices. 

Typical Cloud Cost 

Both on-premise and hybrid cloud are in demand as the industry is swarmed with data and are looking to invest in new storage systems. But these come with their costs, sometimes hidden in the form of cooling cost, electricity and more, proving to be a challenge for the end-users to pick the kind of cloud service. 

On average, the price of 1TB of on-premises storage with exceptional performance can cost over $3000 for a year. Hybrid cloud, on the other hand, maybe priced more. The pricing of cloud services also depends on a lot of factors such as the cost of bandwidth per month, amount of data to be stored and transferred, auditing & compliance costs, managing multi-platforms, specification and number of servers to deploy, location of the cloud data centre, and other customisation costs. 

For instance, some workloads need to be highly resilient. File services and SaaS applications may need to be spread among multiple data centres, resulting in the need to buy twice as much equipment, thereby increasing costs. 

Having said that, the narrative around clouds could be changing as we enter 2021. With an evident shift towards cloud, cloud providers may be working towards restructuring their cloud costs. 

AWS, Google Cloud, Azure are considered to be the major competitors in the space, of which Google Cloud Platform is consistently the most economical option. However, the cost may differ based on customised and discounting models that combine to create a highly personalised cloud deployment.

Cloud ProviderCloud Hosting OfferPrice Per Month
Google Cloud PlatformCustom Machine 8 GB RAM / 4x CPUs$126
Microsoft AzureA4 v2 Virtual Machine$159
Amazon Web ServicesEC2 c5.xlarge + 1 TB SSD EBS$225
Img Src: Kinsta
Img Src: Gartner

Will This Cost Decrease In 2021

While AWS, GCP and Azure have dominated the cloud space so far, other players such as Oracle, IBM, VMWare, and other startups in the space are catching up with the competition swiftly. While the cloud market was monopolistic in many ways, an increase in the number of vendors is providing options for businesses to pick from. They are now offering better scalability, customisation options as per the exact business requirements, and highly tech-driven. These players are continuously working on amping up their game. 

For instance, IBM is aggressively moving the hybrid cloud way and has collaborated with AWS to help clients simplify and extend their security visibility across AWS and hybrid cloud environments. It had also split up to focus on hybrid cloud and AI offerings. Similarly, in its AWS re:Invent event, Amazon has announced major developments around the cloud. Many other companies such as Google, Salesforce, and even startup service providers are getting competitive in offering cloud services. With the competitive market offerings, will the prices get competitive too? Can we expect a drop in cloud prices in the coming year?

The rise in demand and the increased investment is likely to decrease the cost of this technology for India’s price-sensitive enterprises, believes Kazim Rizvi, Founder of The Dialogue, a tech policy think tank. “Cloud is the backbone of a data-driven, app-based tech ecosystem that has been vital in helping us manage the changes caused due to the pandemic. The availability of cloud services for India’s startup ecosystem and MSME sector at an affordable rate will result in incredible support for the budding entrepreneurs and a significant impact on India’s digital economy,” he further added. 

Anjani Kommisetti, who is the Country Manager, India & SAARC at Raritan, also believes that with cloud and colocation data centre providers expanding to tier-2 cities to provide better services, the operational costs are expected to come down along with the requirement for capacity. “Affordable solutions provided in tier 2 and 3 cities will also encourage startups and small businesses to adopt cloud-based applications, instead of hosting on their own servers,” he added.

Cloud cost may vary depending on the service provider; however, it’s imperative for businesses to identify their needs and plan to achieve cost-efficiency,” shares Nishant Rathi, CEO, and Founder of NeoSOFT Technologies. Since cloud service packages come in heterogeneous formats to include pay per usage, reserved capacity, volume discounts, and many more, he believes that the cost might differ based on the offering.

Wrapping Up

The popularity of cloud has grown beyond the pandemic, and by 2021, most of the work will be on the cloud. Therefore, it would not be unusual to see a rise in new services around the cloud being offered at a price that is highly competitive in the market. Most cloud providers will work in the direction of providing scalability, cost efficiency, and business resilience for enterprises. 

Srishti Deoras
Srishti currently works as Associate Editor at Analytics India Magazine. When not covering the analytics news, editing and writing articles, she could be found reading or capturing thoughts into pictures.

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