451 Research: Cloud Price Index finds serverless usually cheaper than virtual machines and containers

SOURCE: 451 Research

In the industry’s first analysis of serverless cloud pricing, 451 Research has found that, for the majority of new applications, serverless offers a lower cost of ownership (TCO) than virtual machines (VMs) and containers. Let me know if you are interested in speaking with report author Owen Rogers for more information.

When analyzing serverless offerings from the big four cloud providers – Amazon Web Services (AWS), Google, Microsoft and IBM – 451 Research’s Cloud Price Index shows that IBM generally offers the least expensive service, with Microsoft leading for certain configurations.

The TCO of serverless tends to be lower than VMs, even when the VM is hosting containers, because there is no need for developers to provision, configure and manage the infrastructure. As an example scenario: when a serverless function is active for just three quarters of the month, it only takes a 10-minute saving in operational overhead for serverless to beat virtual machines on TCO. Even without the savings in developer time, the ability of serverless to increase utilization means it is cheaper than using VMs when the code is executed fewer than 500,000 times each month.

451 Research’s Cloud Price Index finds that IBM is cheapest for 0.1-second duration scripts, and Azure is cheapest for 10-second scripts, assuming memory requirements match predetermined size allocations. Plus, IBM offers a distinct cost advantage by allowing users to choose exact memory requirements, whereas other providers round up the figures, resulting in users paying for unused capacity.

Considering the similarities in pricing methods and offerings between providers, 451 Research believes serverless is poised to undergo a round of price cutting this year.

“Serverless is more than just hype; it has the potential to transform the way we develop, build and run applications in the cloud. Understanding the economics of serverless technology is vital to understanding its potential to disrupt the industry. Freemium serverless offerings from the four big cloud providers are already fueling the growth of serverless services by stimulating experimentation and helping enterprises gain skills. This could lead serverless to be the next cloud price war battleground,” said Owen Rogers, research director, Digital Economics Unit at 451 Research.

451 Research expects adoption of serverless – or FaaS (functions as a service) – to continue growing over the next few years. In its 2016 Voice of the Enterprise (VotE): Cloud Transformation, Workloads and Key Projects , 37% of the IT decision-makers surveyed were already using serverless technology to some degree.

Serverless computing is the ability to execute code on demand, with no need to provision the underlying infrastructure, and it caught on when AWS launched Lambda in 2014. IBM’s Bluemix and Google soon followed, with Microsoft the most recent hyperscaler to enter the market. The term ‘serverless’ implies that no servers are used to run an application or service; but in reality, this model means that developers and cloud operators do not need to worry about the complexity and maintenance of VMs or containers.

About the CPI and Methodology

451 Research’s Cloud Price Index is designed to give enterprises and service providers insight into the cloud landscape so they can make more informed decisions when buying and selling cloud services. Like a consumer price index, 451 Research’s Cloud Price Index is made up of a basket of goods. In this case, it is also a specification of the services required to operate a typical web server application including compute, storage, databases, management and serverless. The Cloud Price Index covers 30 public and private cloud capabilities from 50 providers, covering 90% of the global IaaS market.

The full report with detailed analysis of serverless pricing models is available to subscribers here.

About 451 Research

451 Research is a preeminent information technology research and advisory company. With a core focus on technology innovation and market disruption, we provide essential insight for leaders of the digital economy. More than 100 analysts and consultants deliver that insight via syndicated research, advisory services and live events to more than 1,000 client organizations in North America, Europe and around the world. Founded in 2000 and headquartered in New York, 451 Research is a division of The 451 Group. Learn more.