The battle of the computing clouds is intensifying – The Economist

The battle of the computing clouds is intensifying – The Economist

HOW MUCH have you spent on the cloud today? It takes Robert Hodges only a few clicks to find out. He pulls up a dashboard on a computer in his home office in Berkeley, California, which shows cloud spending at his database firm, Altinity, in real time. The cloud represents half of Altinity’s total costs.

Mr Hodges’s widget is a window onto the future. As bills soar, every firm of any size will need to understand not just the benefits of the cloud, but also its costs. Gartner, a consultancy, reckons that spending on public-cloud services will reach nearly 10% of all corporate spending on information technology (IT) in 2021, up from around 4% in 2017. Plenty of technophile startups spend 80% of their revenues on cloud services, estimate Sarah Wang and Martin Casado of Andreessen Horowitz, a venture-capital firm. The situation is analogous to a century ago, when electricity became an essential input (and prompted some firms to hire another kind of CEO: the chief electricity officer).

For cloud companies this has been a bonanza. Giants of the industry, such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform (GCP) and, in China, Alibaba and Tencent, have been adding business briskly. Gartner expects global sales of cloud services to rise by 26% in 2021, to more than $400bn. But competition is stirring. On December 9th Oracle, a big software-maker, reported higher revenue than expected, mainly thanks to the rapid growth of its cloud unit. Its market value shot up by nearly 15%, or over $40bn. And a vast welkin of companies is emerging to help businesses manage their computing loads. One such firm, Snowflake, is worth $108bn. Another, HashiCorp, went public in New York on December 8th and now boasts a stockmarket value of $15bn, three times its last private valuation in 2020.

The latest cloud formation and the winds shaping it were on full display this month at Re:Invent, the world’s largest cloud-computing conference, held every year in Las Vegas by AWS. Panels about “cost optimisation” and “AWS billing” were among the most popular. The accompanying expo featured booths where startups with names as CloudFix, Cloudwiry and Zesty were offering to help customers manage their cloud use.

Businesses’ main motive for moving to the cloud was never about cost but “scalability”: having access to additional computing resources with a few clicks. But cloud bills have grown more complex as well as higher, sometimes rivalling those from America’s notoriously opaque health-care providers. The AWS bill of even a small customer like the Duckbill Group, another cost-consulting firm, can run to more than 30 pages, listing in detail the cost of every single service it has used, from bandwidth in India ($0.01 per request to its website) to a virtual server in Oregon ($83.59 for “Amazon Elastic Compute Cloud” running open-source software).

That is only natural, says Corey Quinn, co-founder of the Duckbill Group. Big cloud providers such as AWS, Azure and GCP are amalgamations of dozens of services. AWS sells more than 200, ranging from simple storage and number-crunching to all sorts of specialised databases and artificial-intelligence offerings. Each is billed according to multiple dimensions, including the number of servers, time …….

Source: https://www.economist.com/business/the-battle-of-the-computing-clouds-is-intensifying/21806813

Computers