Google, Amazon, and Microsoft intensify cloud-computing competition by cutting prices with private data centers

Amazon, Google, and Microsoft intend to intensify their competition in the cloud-computing business in the coming year, cutting prices and driving companies including IBM and VMware to look for other ways to make money.

As legacy technology companies find it harder to compete with the dominant players in data-storage services, there may be more acquisitions of security and data-analytics companies, Anurag Rana, a software and IT services analyst for Bloomberg Intelligence, said yesterday.

“This could be an area where we could see some pockets of increased M&A in 2016,” Mr Rana said.

The pace of high-profile hacking incidents has accelerated and security-focused software providers such as Palo Alto Networks have performed well as companies attempt to protect themselves.

Data-analytics software, which helps companies make sense of large amounts of information, will also become a way for software providers to differentiate their offerings, he said.

Amazon, Google, and Microsoft, which build their own data centres with cheaper non-branded hardware and rent out space to companies through the internet, are dropping their prices multiple times a year.

That raises the question of how much value is generated by the private data centres and tailored services offered by older companies, Anand Srinivasan, hardware analyst at Bloomberg, said.