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.

That can be awfully hard to calculate, especially with so much "cloud washing," companies offering services they call cloud that are actually thinly-disguised versions of older offerings, going on.

Research firm Vanson Bourne suggests you only call an offering cloud if it's available on-demand and self-service, and if pricing is scalable, elastic, pay-as-you-go. Many companies that think they're buying "cloud" are, for instance, paying regular rent on storage they're not using. That's not cloud.

OSIntegrators, a Durham, N.C.-based consultant, recently tried to deploy a file on a number of different cloud platforms and posted the results, on its Web site , including screenshots. What the exercise shows is that cloud is not yet easy, and price is not yet the only metric you need to use.

So where does that leave us? At the start of a long and bumpy road. Customers know what to expect from public cloud services, and some companies are starting to meet those demands. This is a market with leaders and followers, with a few big players who've got game and a lot who just talk a good game.

If you're looking to buy public cloud services, or move your enterprise computing system into the public cloud to save money, 2013 shapes up as an awfully interesting ride. If you're an investor, know that roller coasters and hurricanes can also give you awfully interesting rides.

At the time of publication, the author was long IBM, GOOG MSFT and RHT.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.