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Comment by vjz | Hacker News Reader

From the article: "what these two sets of massive reductions show is that companies like Amazon were probably charging far higher for their services than it cost to build and run them"

It absolutely does not show that. What it shows is that these are commodity services with little differentiation, and the only lever is price.

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In concrete terms, Amazon and Google are both companies that have run popular services that lost money, or profited very little.

Cloud services are neither company's primary offering.

Therefore it's reasonable to believe that the list price of their cloud offerings are not at all related to the cost of building and maintaining them.

The question is: do you need to be someone with the size/capabilities of Google to compete in this market, or there are many companies that can make that "commodity" ?

Because if the answer is the first one, this looks like a good place to be in.

and how can you reduce the price without operating at a loss? if you left room to reduce prices. so yes, it does show that.

It's quite possible that Amazon and/or Google is prepared to operate their cloud (or some parts of their cloud) at a loss, or at least at zero margins. Look at Amazon's financial statements and you'll find they operate almost all their business on zero margin.

The reasons for that differ - Amazon optimises for growth and market domination over profits, while Google doesn't want to see Amazon control the entire cloud market.

You're making an assumption that they aren't now operating at a loss. I don't think they are but I wouldn't assume it. It wouldn't be the first time they've operated at a loss in an attempt to corner the market.

Who defines when a price is "far higher" than it could be? And who says they aren't operating at a loss?

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