Last quarter in cloud: Brazil drops, transcription grows and data streams
May 19 2021
by Jean Atelsek
After silicon-driven declines in compute pricing in 2020, 451 Research's Cloud Price Index (CPI) recorded only a slight drop in Q1 2021, largely driven by AWS price reductions in Brazil and continued rollout of the company's ARM-based Graviton processors. Service changes captured by the CPI Cloud Price Tracker during the quarter indicate that Azure had the broadest set of price cuts by category. Service additions point to strengthened portfolios in analytics, containers and machine learning – geographic hot spots include Japan and Brazil.
The 451 Take
Despite only a slight topline drop in the Cloud Price Index in Q1 2021, hyperscalers continue to refine their portfolios and explore what the market will bear in terms of paying for new or unique offerings. During the quarter, we captured almost half a million service changes made by the five providers we track: AWS, Azure, Google, IBM and Alibaba. In a market with no discernable seasonality, however, what counts more than volume is variety: Which service categories and regions are receiving attention from multiple providers? A point-in-time look at provider moves only scratches the surface of the massive, churning hairball of cloud service complexity, but it helps focus in on the technologies playing a role in creating – and ultimately addressing – the resulting challenge.
Cloud pricing registers a slight drop – France awaits Graviton VMs
For over five years, the Cloud Price Index has tracked the shifting cost of a standard basket of cloud services, collecting pricing and following benchmarks revealing what the market is paying for compute, storage, bandwidth, databases, load balancing and a host of other cloud-based offerings around the world.
After registering the biggest annual drop in VM pricing (down 8-15%) since its inception in 2020 – largely due to a raft of new, more performant and cheaper CPUs coming online – the CPI benchmarks turned in a tame result for Q1 2021. In all regions except Brazil, the small basket benchmark (consisting of compute, storage and bandwidth) was flat, while the large basket fell by 2% thanks to lower database instance costs.
Notable price reductions during the quarter included AWS's 40% cut in Glacier archive storage costs (as of Q2 2021, CPI has added an archive storage benchmark, among others) and broad-ranging compute price drops in Brazil. Despite prices easing in Brazil, it remains the most expensive region for our basic basket of goods, costing 64% more than in US East (see figure below). France's position as the next-most-expensive region is primarily due to the fact that market leader AWS has yet to roll out its Graviton-powered VMs there.
Small Basket Price Premium by Country (vs. US East), Q2 2021
451 Research: Cloud Price Index, 2021
The story behind the SKUs
The CPI Cloud Price Tracker takes a weekly look at the pricing APIs of AWS, Microsoft Azure, Google Cloud Platform, IBM Cloud and Alibaba, which together account for about 70% of the global cloud infrastructure market, and tracks what has changed since the prior week. The changes in Q1 2021 reflect an uptick in activity from last year, with over 480,000 service changes – in all of 2020 we logged 900,000 SKU changes, down from 1.2 million in 2019.
As usual, AWS accounted for the lion's share of the activity, with almost 400,000 service changes across its portfolio. IBM also recorded a raft of service additions, many devoted to building out new multi-zone regions in Toronto and Sao Paolo. IBM is adding capabilities to its two Amsterdam datacenters, as well.
At the beginning of March, AWS officially opened its Asia-Pacific Osaka region to all customers, complete with the company's standard three Availability Zones – previously, Osaka was a local region used as a disaster recovery option for Japanese customers. To give a hint of the massive SKU jockeying required for such an event, over 27,000 AWS SKUs were added for the Osaka region during March 2021.
Category-wise, new frontiers in cloud services can be discerned by examining net SKU additions by category and then seeing if the momentum holds up when measured as a portion of the total service changes in that category. Especially noteworthy are areas where services are being added globally or in multiple regions by more than one provider, indicating cross-cloud competition in that arena. In Q1 2021, a few categories stood out with service additions by multiple big three suppliers:
Analytics: AWS announced AWS Glue DataBrew in November 2020 and in Q1 2021 rolled it out to nine additional regions, including Mumbai, London and Sao Paolo. Glue DataBrew is a visual data preparation tool designed to take the manual toil out of cleaning and formatting data stores for running analytics, creating reports, or applying machine learning models. Azure Stream Analytics also launched in November 2020 and in Q1 2021 added a range of SKUs for streaming units – the service is designed to ingest streaming data in real time from sources such as IoT devices, web logs and point-of-sale systems for real-time processing and output to alerts, dashboards or data stores. Google Cloud Composer, based on the open source Apache Airflow project, is a managed service for creating, scheduling and managing workflows. In Q1 2021 Google added a handful of Cloud Composer SKUs supporting deployment in GCP's Warsaw region, which opened in April.
Containers: Additions in the container category for the big three hyperscalers were targeted by region, but interestingly, all were for serverless container platforms (AWS Fargate, Azure Container Instances and Google Cloud Run), which use as the primary unit of management Kubernetes-native components (clusters, pods, namespaces) rather than VMs.
Machine Learning: AWS's adds in this space during the quarter included over 1,000 SKUs related to text-to-speech and speech-to-text comprehension and transcription across multiple regions. Additional Azure SKUs covered computer vision, speech and translation services, as well as the Azure Health Bot platform for building compliant virtual health assistants.
Price drops were relatively few and far between – we captured over 1,400 price reductions of greater than 10% among the big three hyperscalers in nine categories, and Azure was the only one with 10%+ reductions in five of those categories (analytics, machine learning, management & governance, media services, and virtual reality). As usual, the most mature categories, compute and storage, posted the most 10%+ price drops by volume:
Q1 2021 Price Decreases Greater than 10%, by Service Category
451 Research: Cloud Price Index, 2021