August 8, 2023

The price of cloud computing services has been increasing in recent months, while the cost of traditional hardware has been decreasing. This is leading some businesses to reconsider their cloud computing strategies and to look at on-premises hardware as a more cost-effective option.

In a blog post, technology analyst Ben Lorica noted that the Bureau of Labor Statistics Producer Price Index reported a 3.9% month-over-month decline in the cost of host computers and servers in May 2023. At the same time, cloud services saw prices increase by 2.3% since the third quarter of 2022.

Lorica said that this price gap is making it more difficult for businesses to justify the cost of cloud computing. “In the past, cloud computing was often seen as a way to save money,” he wrote. “But now that the prices are starting to converge, businesses need to carefully consider their options.”

There are still some advantages to cloud computing, such as the ability to scale resources up or down quickly and the fact that cloud providers handle maintenance and updates. However, the price gap is making these advantages less significant.

As a result, businesses are increasingly looking at on-premises hardware as a more cost-effective option. On-premises hardware is typically more expensive upfront, but the long-term costs are lower. Businesses also have more control over their data and applications when they use on-premises hardware.

The sources for this piece include an article in InfoWorld.