Forget Moore's Law in cloud. Meet Bezos’ Law

This article appeared in the July issue of CRN as part of the main feature "Who wins in the cloud price wars?"

Everyone should be familiar with Moore’s Law: the tried and trusted measure that shows computing power – measured by the number of transistors on integrated circuits – doubles every two years.

But have you heard of Bezos’ Law? Greg O’Connor, founder of US-based Windows server migration vendor AppZero, has proposed a new equation based on the observation that, over the history of cloud, a unit of computing power price has reduced by approximately 50 percent every three years.

In a blog post, O’Connor wrote: “If you were to apply a Moore’s Law approach to capture the rate of change for cloud, you could hold constant the compute unit, while the gains are expressed in terms of lower price.

“Bezos’ Law is the observation that, over the history of cloud, a unit of computing power price is reduced by X percent approximately every Y years; or, Bezos’ Law is the observation that, over the history of cloud, a unit of computing power is increased by X percent approximately every Y years at a fixed price.”

By digging through figures from the Amazon Web Services blog, O’Connor found that average AWS prices had fallen from 80c to 41c in the three-year period between 2008 and 2011, and from 41c to 21c in the three years from 2011 to 2014.

“Clearly, cloud, as opposed to building or maintaining a data centre, is a much better economic delivery approach for most companies,” wrote O’Connor.

“How can an enterprise data centre possibly keep up with the hyper-competitive innovation from Amazon, IBM, Google and Microsoft?”