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An information technology research firm has announced a decline in its cloud price index (CPI), attributing the fall to price cuts at Google and reductions of up to 43 percent on bandwidth by Amazon Web Services (AWS).

451 Research's Cloud Price Index fell 1.32 percent over the past eight weeks to $2.53 at the start of December due to price cuts of up to 79 percent by Google and the AWS restructuring. The London-based research firm created its cloud pricing index last month.

Not a Huge Dropoff

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Owen Rogers, senior analyst for digital economics for 451 Research, told CMSWire the $2.53 number reflects the average hourly cost from six cloud providers of a running a “typical" web application built upon an cloud infrastructure of virtual machines, storage platforms, databases, support services and network capability.

Rogers cautioned, however, that while the 1.32 percent is meaningful, "you could be fooled into thinking you might save a small fortune."

However, the CPI figures demonstrate that a "typical application will only be cheaper by 1.5 percent compared with two months ago."

Still, Rogers said, "Extrapolate those price cuts over a year and we're looking at a 10 percent drop, certainly not to be sneezed at."

As for the result of Google’s October price cut, the cost of powering a typical web application upon Google Compute Engine came down 7 percent, Rogers added.

Knowing the Charges

Asked what the takeaway is for enterprises "cloud-shopping" when looking at Google's cuts and AWS's restructuring, Rogers told CMSWire they must "realize that the cost of cloud is more than just virtual machines."

"Running an application," he said, "requires a whole bundle of cloud services, and consumers should make sure they understand how all the charges impact their monthly invoice."

But when dealing with public cloud charges, it's not always easy, according to the chief technology officer of one hosted private cloud provider.

"The challenge with public cloud pricing is that the bill is the sum of so many parts," said Jesse Proudman, founder and CTO of Seattle-based Blue Box Group, Inc. "Big percentage drops in smaller portions of bill have marginal impact on your aggregate spend. I joke that it takes a Ph.D. to understand your composite Amazon bill. Sadly, this joke is funny because it's true."

451 Research launched its CPI to "examine the real-world cost of cloud over time." According to officials it is the specification of a multiservice, three-tier cloud application consisting of Linux VMs, object storage, block storage, relational databases, NoSQL databases, load balancing, access control lists and snapshot backup in a resilient architecture.

Title image by Tambako The Jaguar  (Flickr) via a CC BY-NC-SA 2.0 license.