Business Cloud News

Money cloudThe cloud service market in the US is much more competitively priced than in Europe but Latin America gets the worst deals in the world, according to a new study. Europeans pay up to 19% more for the same services when they are hosted in home territory.

According to the new Cloud Price Index report from 451 Research, Americans enjoy the most competitive prices globally. On average Europeans pay between 7 and 19% more, depending on the complexity of the application. Asia Pacific comes second bottom in the price performance study. However, anomalies exist and deals are available to those who shop around, says the report.

The ‘protection premium’, the extra price of hosting services in-country or in-region services, rather than using the cheaper option of US services, is not just the cost of compliance. The extra investment needed by European cloud users is a result of three pressures: the need to meet local regulations, the need to boost performance by bringing apps closer to users and the use of local customer service.

In Europe, soaring local cloud demand, driven by data protection legislation, has created uncertainty about access and responsibility and confused cloud buyers and service providers. The net effect of issues like Safe Harbor, the Patriot Act and the new US-EU Privacy Shield agreement is that european buyers will pay more.

Don’t expect that to change for the better just yet, said Penny Jones, Senior Analyst for European Services. “It won’t be clear what the European Court of Justice thinks about the legislation until they have reviewed a case or two,” said Jones.

Cloud services are even more pricey in Asia Pacific and Latin America, according to the report. Comparable hosting in Asia Pacific and Latin America can cost 38% more than in the US. Taking average prices as a benchmark, Latin America has the most extreme variations in prices, thanks to its limited selection of hosting providers.

There is also an extreme price polarity between the small and large applications in Europe. Users pay double the premium for a large application, composed of computing, storage, platforms and support, in comparison to simpler virtual machines. These discrepancies are the result of skills shortages and an SME market willing to pay more for support on complex applications.

The lesson is that cloud buyers must be more diligent about researching huge price variations according to 451 Research Director Dr Owen Rogers. “One provider charged more than twice the average US price for hosting in Latin America. Another offered an 11% discount for hosting in Europe compared to the US,” said Rogers.