The infrastructure-as-a-service (IaaS) space is heating up now that Amazon is venturing into the enterprise, and the competition is firing back.  IaaS is a particularly pert topic for us this week as we broadcast live from the OpenStack Summit, in Portland, Oregon.  As Rackspace and Amazon battle for the enterprise space, OpenStack could play a key role in empowering Rackspace and others to build scale-out solutions in their datacenters.

AWS is leveraged by hundreds of thousands of developers and small businesses, but the company does not yet have a substantial presence in the traditional enterprise market.  Amazon is hoping to change that with an aggressive marketing strategy that depends in great part on highly competitive rates. Dave Vellante provides a break down this approach in a February piece.

“Amazon makes a lot of noise about the fact that it has cut service pricing 25 or 26 times since inception,” Vellante writes. “But this stat is somewhat misleading. Every enterprise vendor cuts its price per unit of compute or storage every quarter thanks to Moore’s Law. But Amazon has been smarter about advertising this fact and implying that frequent price cuts = lower costs. But it’s not necessarily true.”

Rackspace, another prominent IaaS provider that’s looking to gain a foothold in the enterprise, recently took a page from Amazon’s book and reduced the cost on its Content Delivery Network service by 30 percent. Not wanting Rackspace to get the better of things, the latter announced that it has it slashed its Reserved Instance rates by up to 28 percent just two weeks after we reported the CDN price cut went into effect.

As the name suggests, Reversed Instances give customers the choice of paying an upfront fee in exchange for a massive long-term discount.  This service is popular among large organizations that don’t mind the high cost of entry so long as it benefits the bottom line further down the road.

Cloud providers are duking it out with each other and traditional enterprise vendors, such as IBM, EMC and VMware. VMware/EMC in particular are gearing up to compete with AWS through a partner ecosystem approach that will attempt to drive VMware’s stack throughout the ecosystem to create more facile interoperability. As well, NetApp stands out, taking a slightly different approach to addressing IaaS last month, when it launched a supplementary private cloud add-on for  AWS.

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