ProfitBricks opens price war with Amazon Web Services for infrastructure-as-a-service

ProfitBricks takes the gloves off. The Berlin-based infrastructure-as-a-service (IaaS) startup acts with a hard edge against the Amazon Web Services and reduced its prices in both U.S. and Europe by 50 percent. Furthermore, the IaaS provider has presented a comparison which shows that its own virtual server should have at least twice as high as the performance of Amazon Web Services and Rackspace. Thus ProfitBricks is trying to diversify on the price and the performance of the U.S. top providers.

The prices for infrastructure-as-a-service are still too high

Along with the announcement, CMO Andreas Gauger shows correspondingly aggressive. “We have the impression that the dominant occurring cloud companies from the U.S. are abusing their market power to exploit high prices. They expect deliberately opaque pricing models of companies and regularly announce punctual price cuts to awaken the impression of a price reduction.”, says Gauger (translated from German).

ProfitBricks has therefore the goal to attack the IaaS market from the rear on the price and let their customer directly and noticeably participate from technical innovations resulting in cost savings.

Up to 45 percent cheaper than Amazon AWS

ProfitBricks positioned very clearly against Amazon AWS and shows a price comparison. For example, an Amazon M1 Medium instance with 1 core, 3.75GB of RAM and 250GB of block storage is $0.155 per hour or $111.40 per month. A similar instance on ProfitBricks costs $0.0856 per hour or $61.65 per month. A saving of 45 percent.

Diversification just on the price is difficult

To diversify as IaaS provider just on price is difficult. We remember, Infrastructure is commodity! Vertical services are the future of the cloud, with which the customer receives an added value.

To defy the IaaS top dog this way is brave and foolhardy. However, one should not forget something. As hosting experts of the first hour Andreas Gauger and Achim Weiss have validated the numbers around their infrastructure and seek with this action certainly not the brief glory. It remains to be seen how Amazon AWS and other IaaS providers will react to this stroke. Because with this price reduction ProfitBricks shows that customer can actually get much cheaper infrastructure resources as is currently the case.

As an IaaS user there is something you should certainly do not lose sight of during this price discussion. In addition to the price of computing power and storage – which are held up again and again – there are more factors to take into account, that determine the price and which are actually just call to mind at the end of the month. This includes the cost of transferring data in and out of the cloud as well as costs for other services offered around the infrastructure that are charged per API call. In some respects there is a lack of transparency. Furthermore, a comparison of the various IaaS providers is difficult to represent as many operate with different units, configurations and/or packages.

By Rene Buest

Rene Buest is Gartner Analyst covering Infrastructure Services & Digital Operations. Prior to that he was Director of Technology Research at Arago, Senior Analyst and Cloud Practice Lead at Crisp Research, Principal Analyst at New Age Disruption and member of the worldwide Gigaom Research Analyst Network. Rene is considered as top cloud computing analyst in Germany and one of the worldwide top analysts in this area. In addition, he is one of the world’s top cloud computing influencers and belongs to the top 100 cloud computing experts on Twitter and Google+. Since the mid-90s he is focused on the strategic use of information technology in businesses and the IT impact on our society as well as disruptive technologies.

Rene Buest is the author of numerous professional technology articles. He regularly writes for well-known IT publications like Computerwoche, CIO Magazin, LANline as well as and is cited in German and international media – including New York Times, Forbes Magazin, Handelsblatt, Frankfurter Allgemeine Zeitung, Wirtschaftswoche, Computerwoche, CIO, Manager Magazin and Harvard Business Manager. Furthermore Rene Buest is speaker and participant of experts rounds. He is founder of and writes about cloud computing, IT infrastructure, technologies, management and strategies. He holds a diploma in computer engineering from the Hochschule Bremen (Dipl.-Informatiker (FH)) as well as a M.Sc. in IT-Management and Information Systems from the FHDW Paderborn.