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We have previously written about changes to the cloud market and the trends for 2022/2023. This blog post is a quick update on what's changed in the last six months, and a lot has changed.
So what are the main pressures on the cloud providers in 2022-Q4, and what does this mean for my MS Azure Hosting?
- Global supply train disruption - As you are probably aware there has been disruption across the world affecting supply chains for key materials and end products. This has meant that there has been pressure on semiconductor component supply chains as well as a production shortage in 'chips' for servers. This has led to Azure announcing that they are extending the operational lifespan of their underlying Azure hardware.
- Ukraine - The protracted crisis in Ukraine has put pressure on food supply lines as well as numerous major sources of raw materials for technology supply chains. This has had a wide-ranging impact on a variety of businesses.
- Taiwan's status - Taiwan's ongoing status and China's claim to the islands have been back in the headlines several times this year with war games held by China increasingly encroaching on their territory. Taiwan is a major global player in the semiconductor and chip manufacturing markets, so this is having a direct effect on the availability of computer hardware.
- China's chip manufacturing collapse - Recent turbulence in the Chinese economy has led to certain companies having to sell assets and value those assets. This has led to several scandals regarding chip manufacturers with high market valuations collapsing once their operations were examined. This has then led to several high-profile arrests both within the industry and the party.
- Cloud economies of scale reached? - As the cloud expanded and cloud providers were able to do things at an ever-increasing scale, prices were kept low. Also, competition between the three main players (AWS, Azure, and Google Cloud) remained high and prices actually fell. Now that the cloud has arrived the ongoing economies of scale might have been reached and efficiency gains will start to slow down or disappear
- Energy prices increasing globally - The cloud providers are not energy suppliers, and data centres consume a lot of energy. This is why many of them have a focus on green or self-sufficient energy production for their data centres. This might soften the blow in the longer term but as they come off whatever energy deals they are on their underlying costs in particular regions will skyrocket and they will have to pass that on
- Inflation and a strong dollar - All the main cloud providers underpin their operations with the US dollar which is a global reserve currency. This remains strong but the US economy is experiencing rising inflation which is pushing up the cost of borrowing and causing liquidity in the markets to reduce
What does this mean for my business and what can I do?
As a business owner, what would I be thinking about in relation to my MS Azure hosting with this as the backdrop both globally and nationally?
Businesses today are constantly under pressure to accomplish more with less. They must be able to respond rapidly to changes in the marketplace and scale their operations up or down as needed. At the same time, they must be able to limit their Azure expenses.
For many businesses, getting control of their MS Azure Hosting tenant is the first step. As a business owner, I would be looking at getting control of my Azure hosting arrangements to help control cost and performance over the medium to long term.
Getting control allows you to implement cloud management software to manage the day-to-day and save on maintenance and support costs. It also means you have a direct relationship with the main cloud provider, so you don't have a middleman when Azure cost increases occur as well.