A Look into Google’s Pricing Strategy
It’s a well know fact that the top players in cloud market are engaged in an aggressive pricing strategy to woo customers and to increase their overall market share. Out of the top names like AWS, Microsoft, IBM and Google, the one company that’s know for its deep price cuts is Google.
So, is it true that Google cuts its prices with an aim to increase the market share?
Apparently no, according to Tariq Shaukat, the president of customers at Google Cloud. In an interview to CNBC, he said that Google will never be involved in a price war because he believes that Google’s products offer a high value for its customers. So, there is no need to engage in a price war.
However, he has also said that Google offers a flexible pricing model for its products and this way, customers are already saving money when compared to what they pay for the same service with other cloud providers.
One of strategies that Google offers to its customers is that they are billed by the minute and not by the hour, like many other cloud providers. This way, customers pay exactly for what they use and not even a minute extra.
In addition, Google’s services are comprehensive as it includes data analysis, machine learning, artificial intelligence and more that are built into its products. This way, customers stand to gain a lot more for the same money they pay, opined Shaukat.
While this is a good strategy and can save money for customers, still it’s a form of price war, albeit in a veiled way.
If you look back, Amazon, Microsoft and Google have been locked in a price war that many analysts believe will severely impact the bottom line and profit margins of all the three companies. With increased competition from companies like Alibaba, there’s a possibility that there giants will slash prices even further, much to the delight of customers.
While this can leave customers happy, this price cutting is not a healthy trend for the cloud industry as a whole and this is what is worrying investors and analysts. They would rather prefer the companies to keep up their profit margins, expand their business and spend more on development, so that more products and cloud applications can come out of it. Such an approach would augur well for the health and sustainability of the cloud industry as a whole.
That opinion aside, Google is still moving on with its expansion plans. Already it has invested more than $30 billion dollars in its cloud business and this is not all. Other companies like AWS and Microsoft are also pouring in millions of dollars to spruce up their products because they all believe that this could be the main revenue driver in the years to come.
All this means the next few years are going to be interesting. Will an aggressive pricing strategy followed by these companies score over analysts’ long-term predictions? Time is the answer.