CloudSigma attributes IaaS price cuts to efficiency rather than Amazon-chasing

CloudSigma is very keen to set itself apart from Amazon(s amzn) and other big-name public cloud providers – it offers unbundled CPU, RAM, storage and bandwidth to make for flexible and fine-grained pricing; in April it went all-SSD for a significant performance and reliability boost; its systems tap into the latest CPUs’ capabilities to support big data workloads; and earlier this month it targeted customers’ data protection fears by making it possible for companies to connect their on-premise infrastructure to CloudSigma’s public cloud virtual networks securely without the need for speed-limiting VPNs.
Now, Zurich-based CloudSigma has cut its compute prices – RAM pricing is down 20 percent and CPU pricing down 15 percent — but again it wants to differentiate this move from Amazon’s constant price-slashing. While CloudSigma said its rivals are cutting prices out of pure competitiveness, it said its own cuts are the result of technological efficiency. OK, it also admits falling hardware prices have something to do with it, although it does point out that it replaces its custom-made equipment on a pretty tight two-year cycle.
As CEO Robert Jenkins (pictured above) put it in a statement:

“Recently, there’s been criticism over cloud providers’ seeming ‘race to the bottom’ as more and more industry players slash prices to compete with Amazon. But, if you look at where AWS started, their price drops have not been in line with Moore’s Law, in terms of increasing compute performance and falling hardware costs, so their margin has actually gone up since 2006.
“Rather than compete via underlying hardware costs, our custom stack allows us to use innovation to compete in the market. We deliver higher levels of performance on the same hardware, as compared to other providers; so we don’t worry about slashing prices based on the competition, just based on the efficiency gains of our technology.”

The point about AWS, which Jenkins told me is backed up by RBS(s rbs) Capital Markets analysis, lines up nicely with a lot of people’s suspicions. Amazon never breaks out the cloud element of its financials, although all available indications show that AWS continues to grow very healthily. The gist of the research, though, is that Amazon’s server hardware costs a tenth of what it did 5 years ago, but there’s only been a 40 percent drop in its overall rates over the same period.
It’s worth keeping an eye on CloudSigma for many reasons: both technological and also stemming from the fact that it’s based in neutral, privacy-centric Switzerland — a useful place to be sited in the midst of the current data protection crisis. Happily, Bernino Lind, CloudSigma’s chief operating officer, will be speaking at our Structure:Europe conference, which runs from 18-19 September in London. He’ll be involved in a panel I’m moderating on the topic of taking on Amazon, so you can be sure the issues in this article will come up for discussion.