How pricey are the hyperscalers' Internet of Things offerings?

Lead Researchers: Owen Rogers, Research Director - Digital Economics Unit, and Christian Renaud, Research Director - Internet of Things

451 Research recently published its Technology & Business Insight: The Economics of IoT report, which compared the pricing models and costs of the cloud IoT offerings of three leading hyperscalers – AWS, Google and Microsoft. 451 Research Voice of the Enterprise IoT survey respondents identify these three large public cloud providers as the leading IoT platform vendors.

To discover these results was no simple task. Costs related to AWS IoT Core, Google IoT Core and Microsoft Azure IoT Hub are structured so differently that manual cost comparisons are almost impossible. Even where pricing models appear simple, subtle differences can have significant cost implications.

For instance, one hidden element that affects cost is that each provider has its own definition of what constitutes a message. Some IoT platforms do not charge for 'keep alive' messages of just a few bytes, while others do. In fact, some cloud providers round up small messages such as this to the nearest kilobyte. This results in a 64-byte 'ping' message being charged for 17 times the capacity.

To account for these differences and complete their analysis effectively, the analysts carefully identified nine pricing parameters that have a bearing on the cost of the hyperscaler cloud IoT platforms. The parameters still led to millions of permutations where one provider would be more cost-effective than the next. The only approach was to price all possible combinations and understand the differences using machine-learning techniques.

The analysts constructed a Python simulation that performed 10 million comparisons of US pricing. Each simulated scenario had a randomly selected configuration of the nine price-impacting parameters. Resulting data was then fed into an analytics platform that produced a Chi-square automatic interaction detection (CHAID) decision tree. The tree revealed which combinations of the parameters drove which provider (AWS, Google or Microsoft) to be the cheapest with a predictive strength of 96%.

Overall, the 451 Research Digital Economics Unit's methodology deduced that Microsoft Azure is the cheapest at scale, but AWS is the least expensive IoT provider for deployments of less than 20,000 devices that each send an average of three messages or fewer at under 6KB a minute. Google was not found to be exclusively the cheapest in any scenario.

To learn more about what factors drive the cloud-related costs of Internet of Things deployments, and in which scenarios each cloud provider has a cost advantage, register below for our webinar on June 13 at 1:00 pm ET.

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Studies show managed services layer is a major cloud service opportunity

Analyst: Liam Eagle

Enterprise adoption of cloud infrastructure offerings and SaaS is accelerating, while the dominance of hyperscale providers is increasing in the public infrastructure-as-a-service (IaaS) cloud market. However, other service providers – including those with a history of providing managed hosting and operating infrastructure of their own – have a notable role to play in the cloud adoption process for the majority of enterprises and smaller businesses. That role is likely to include designing, managing and securing public cloud resources, as well as potentially supplementing them with private cloud resources of their own.

The nature of this role, and the degree of its significance, is supported and detailed in part by a study conducted in the first half of 2016 by 451 Research, and commissioned by Microsoft. In particular, the study results detail the nature of the cloud transformation taking place in the enterprise, and they offer insight into how service providers might take advantage of new opportunities emerging as a result. Understanding and acting on this fundamental shift will be extremely important for traditional hosting providers, as growth continues to dwindle in the core legacy facets of that business, such as shared and dedicated hosting.
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Marriage of Microsoft & LinkedIn: fusion of data, intelligent automation and applications

Analysts: Sheryl Kingstone, Scott Denne, Donnie Berkholz, Ian Hughes, Brenon Daly

On June 13, Microsoft announced plans to acquire LinkedIn for $26 billion. While the list of potential revenue synergies is long, there are three key themes that can be leveraged for future differentiation:

- Data and cloud: Even with a low estimate of one-quarter of LinkedIn's monthly active users, Microsoft can now create a social graph with interests, professional network, company size, etc.
- Intelligent automation: Cognitive and self-learning systems – as well as the data that drives them – are playing an increasing role in the evolution of business applications.
- Enterprise applications: A platform, and not just a destination, that leverages LinkedIn's data to not only augment several of Microsoft's business applications, but an entire app ecosystem.

The 451 Take

The fact that LinkedIn provides a wealth of business profiles makes it attractive to B2B advertisers. Microsoft needs to create a new onboarding experience to enable marketing and advertisers to reach decision-makers. Integrating the data into a variety of Microsoft products, once those are tied to a LinkedIn identity, could create a phenomenal B2B targeting opportunity. It would also provide Microsoft with the ability to drive additional cloud revenue. Microsoft's Azure ML will also provide several options for providing contextual guidance on the data, as well as embedding intelligence into Cortana, Dynamics and Office. The more data to plug into a machine-learning environment, the more accurate the outcome, such as correlating people's backgrounds, interests and abilities to intelligently recommend insight based on hundreds of different data points. It makes the future combination potentially incredibly powerful. Microsoft/LinkedIn must create a platform that embeds the right information at the right time for the right processes to change the dynamics of the business applications market. The future of LinkedIn's API is still unknown; the question remains: Does Microsoft enable an app developer ecosystem around it, or cripple it to enable a competitive advantage?

Read the full report now!
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Deal Analysis: Microsoft connects with LinkedIn with $26bn acquisition

Analysts: Scott Denne, Sheryl Kingstone

No longer able to rely on the dominance of Windows to guarantee its position in enterprise software, Microsoft makes the largest ever acquisition of an internet company with its purchase of LinkedIn – bumping Facebook's $19bn purchase of WhatsApp from the top slot. Microsoft aims to integrate LinkedIn's member identities and depth of data across its suite of productivity and business-process applications, providing it with a differentiator to sustain its market position.

The 451 Take

CEO Satya Nadella has taken strides to make Microsoft a 'mobile first, cloud first' company in his two-plus years heading the software giant. The acquisition of LinkedIn marks his most substantial move yet, and not just in terms of the price tag. Many cloud software offerings from major enterprise software companies are little more than hosted versions of legacy products. By integrating LinkedIn, Microsoft will bring potential features, functionality and benefits to its software that take advantage of the shared infrastructure and connectivity that are unique to cloud offerings, and enable Microsoft's products to benefit from LinkedIn's network effects, which will make it challenging for competitors to match.

Read the full Deal Analysis here! 
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