The Public Cloud War Begins

NEW YORK ( TheStreet) -- Amazon ( AMZN) had a multi-year head start in the public cloud arena, making the Application Program Interface for its Elastic Compute Cloud (or EC2) a defacto industry standard.

Amazon didn't sit on its laurels and milk monopoly profits. It cut prices aggressively, continuously, offering the best pricing to those who paid up-front to reserve "instances" on its cloud. The price list posted on its Web site shows you can now get a single, simple instance there for 6.5 cents an hour, or reserve high input-output, quadruple extra large, heavy utilization instances for $10,960, plus 48 cents per hour.

Amazon pricing is so complex an Israeli start-up called Cloudyn now offers an app on its Web site to let you calculate EC2 pricing, based on your needs.

Google ( GOOG) began pricing its Google Compute Engine as a service more recently. Its price list on the cloud.google.com Web site shows a simple standard instance costs 14.5 cents an hour, with downloads to North America as low as 12 cents per gigabyte. Its largest standard instance, with 8 computing cores and up to 3.5 terabytes of disk space, will rent for $1.16 per hour.

Beyond Amazon and Google, there are many offerings but a lot less price transparency.

IBM ( IBM) calls its offering on its Web site SmartCloud Enterprise, but can offer only a "cost estimator."

AT&T ( T) Cloud Services advertises prices "starting at $50/month" on its Web site but they don't include outbound bandwidth.

Microsoft ( MSFT) offers a host of price options for its Azure public cloud along with a pricing calculator on the Azure Web site .

In 2012, a lot of other companies have gotten into the market based on the open source technology of OpenStack, Gigaom.com notes , originally sponsored by Rackspace ( RAX).

In addition to Rackspace itself, these include Hewlett-Packard ( HPQ), Internap ( INAP), and Web hosts like Dreamhost , which claims it will compete head-to-head with Amazon on price.

What makes OpenStack compelling is how equipment makers like Cisco ( CSCO) and enterprise software vendors like Red Hat ( RHY) are supporting it, so your private and public clouds can become compatible.

VMware ( VMW), which is extending its virtualization systems to the cloud with vCloud, issued a report on its Web site this week saying two-thirds of medium-to-large enterprises are now running some "mission critical" applications on cloud technology. Service and support are currently the key issues, but more are starting to look at the total cost of ownership.

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