What’s in store for the cloud in 2024? These three trends give us a good idea.
TL;DR
- Managing cloud spend is a top challenge, overcoming security for the first time in years.
- Gen AI is driving the cloud industry into new avenues.
- Rising cloud costs make organizations think twice before migrating.
Keep reading to find out what happened in the cloud in 2023.
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Paying A Fair Price In The Cloud
The cloud industry was no stranger to the whirlwind of the energy crisis, inflation, and supply chain issues in 2023. There’s no denying: cloud services have become more expensive, yet companies are still wasting them.
Top data points:
- Spot instances have become more expensive, as shown in CAST AI research and another study.
- The US Producer Price Index (PPI) showed that while the cost of computers and servers is dropping by 3.9% month-over-month, cloud services are getting more expensive, by 2.3% since Q3 2022.
- Azure pricing for all cloud services increased by 9-15% in the UK and Europe from April 2023.
- Gartner forecasted worldwide spending on public cloud services in 2023 to reach $591 billion, a 20.7% uptick from 2022’s $490 billion.
- 82% of respondents to a recent survey said that their top cloud challenge is managing cloud spend. Self-estimated wasted cloud spend was 28%.
- Over half of corporate cloud spend commitments are unused, amounting to more than $300 billion in untapped credits, according to Infosys.
To Cloud Or Not To Cloud
The rapidly growing cloud costs and uncontrollable waste have contributed to a lively discussion about how the cloud is no longer a slam dunk. It’s also become clear that companies should think twice before migrating applications to the cloud without preparing them first.
Top data points:
- X shifted its workloads to on-prem and reduced the monthly cloud costs by 60%, DHH announced. But what chunk of these cost savings has now become CapEx instead of OpeEx? And what about the salaries of all the on-prem experts?
- On the other hand, giants like Uber are moving to the cloud, as the Google Cloud CEO publicly confirmed the signing of a long-term contract with Uber.
Gen AI Changes The Cloud Landscape
ChatGPT accelerated the growth of AI 10x last year, prompting companies both large and small to embark on a wild goose chase for GPU chips. Combine this sudden spike in demand with supply chain issues, and you get yourself into a situation where people take quite extraordinary measures to get their hands on GPU.
Top data points:
- a16z has seen companies spend more than 80% of their total capital raised on compute resources.
- Gen AI budgets can grow 3.4x larger than anticipated. The bill for training and running LLMs can reach $700,000 a day, as OpenAI’s infrastructure is on Azure.
- Gen AI data center and infrastructure costs are projected to reach $76 billion by 2028.
- Tech giants are pouring billions of dollars into building gen AI capabilities and ensuring the availability of cloud capacity (they spent $42 billion in Q3 2023 alone).
- Let’s not forget about the environmental cost of running LLMs.
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This series explores the most attention-grabbing cloud technology news, bringing you up to speed with the latest releases, acquisitions, research, and hidden gems in cloud computing – the stuff actually worth reading.
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