IaaS provider ProfitBricks, a young hosting company based in Germany with a presence in the USA, announced that it will cut its cloud server prices in half. With this price drop ProfitBricks’ cloud instance prices would now roughly be 50 percent lower than other major cloud computing providers.
Compared to the public cloud pricing of the incumbent hosting companies, ProfitBricks claims that its customers could save at least 45 per cent. For example, a cloud instance with 1 core, 3.75GB of RAM and 250GB of block storage would currently be priced at 0.129 Euros per hour or 93.15 Euros per month. A similar cloud instance on ProfitBricks’ public cloud platform would cost 0.0694 Euros per hour or 49.95 Euros per month.
ProfitBricks is convinced that the price cut makes Public Cloud more attractive for enterprises. It’s well documented that private clouds can be less expensive than public clouds once an environment has reached a certain size. With the ProfitBricks price drop this restriction in using public cloud within enterprise environments would have been moved out significantly.
“The price cuts show there is a lot of room for aggressive maneuvering in this market,” said Carl Brooks, analyst at 451 Research. “ProfitBricks is looking to straddle the divide between ‘you-get what-you-get’ cloud instances and expensive custom hosting deployments with automated, flexible configurations. It’s a sensible way to differentiate on the premise of infrastructure as a service.”
Hosting Journalist thinks the drastic price cut could mean several things. Of course, this could be the beginning of some sort of a price war. On the other hand, IaaS cloud hosting already demonstrates a great variation in price levels and accordingly a great variation in cloud functionality. Until now this hasn’t led to a market-wide price drop. We probably should also take in mind that ProfitBricks is a young and eager company, planning to conquer the market. Buying market share by using an initial low-price strategy is not an uncommon marketing strategy. Let’s just wait and see how this drastic price drop will develop in the future.
ProfitBricks is headquartered in Berlin, Germany and Boston, Mass. The hosting company was founded in 2010 by the previous co-founders of 1&1 Internet AG. As a hosting provider, ProfitBricks offers virtual data centres, with custom defined instances, live vertical scaling and double redundant cloud storage – all with minute-based billing. CRN Magazine recently picked ProfitBricks as the ‘Coolest Startup’ of 2012.