Online retailer Amazon is planning to wipe out the traditional suppliers of cloud services in the UK in a price war which will lower the cost of the cloud for many companies.
Andy Jassy, head of Amazon Web Services said that the industry was being controlled by an old guard of technology companies who are over-charging for data warehousing services.
In a move which heralds a price war with the likes of IBM, Oracle and HP, Jassy said he wants Amazon to move into direct competition with some of the world’s largest technology companies.
He unveiled a new data warehousing service that he said will cost about a tenth of what the old guard is charging.
Speaking to Reuters, Jassy said that IBM, Oracle and HP have a pricing model to charge as much as customers can pay and customers were fed up of it.
The news was greeted with a swift reaction from analysts and Wall Street.
Teradata, which provides data warehouse services, saw its shares fall 3.7 percent on concern about competition from AWS.
Derrick Wood, an analyst at Susquehanna Financial Group told Reuters that Amazon entering the space with significantly lower price points was a major cause for concern.
AWS, which Amazon started more than six years ago, provides data storage, computing power and other technology services from remote locations. It has been growing because its services are cheap and easy to use.
It is popular with start-up tech companies and other smaller businesses, but has been ignored by large corporations.
But Jassy expects enterprises to migrate their applications to AWS.
He named Netflix, Royal Dutch Shell, Samsung and InterContinental Hotels as big companies using AWS, along with more than 300 government agencies and over 1,500 academic organisations.
Amazon’s main product is called Redshift. While most companies typically pay between $19,000 and $25,000 per terabyte of storage per year for data warehouse Redshift will cost as little as $1,000 per terabyte per year.
This will shake up Teradata Oracle, IBM and HP as AWS has the potential to be Amazon’s biggest business, out-growing its original online retail operation, Jassy claims.
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