IaaS Providers Comparison: AWS, Azure, Google Cloud, and the Alternatives
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What Is IaaS and When Does It Make Sense?
Infrastructure as a Service (IaaS) provides virtualised computing resources over the internet: virtual machines, storage, networking, and related services. You manage the operating system and everything above it. The provider manages the physical hardware, data centre, and virtualisation layer.
IaaS is the right layer when you need control over your infrastructure configuration, have workloads that do not fit PaaS constraints, have a DevOps team capable of managing infrastructure, or are at a scale where the lower unit cost of IaaS justifies its operational overhead. For most early-stage organisations, PaaS is the faster and simpler starting point.
The three hyperscalers: AWS (Amazon Web Services), Microsoft Azure, and Google Cloud Platform (GCP) account for the large majority of the global IaaS market. Each has comprehensive service catalogues covering compute, storage, databases, networking, AI and ML services, and security tooling. The choice between them depends primarily on existing ecosystem fit, geographic requirements, specific service needs, and pricing at your scale.
AWS vs Azure vs Google Cloud: How They Compare
AWS (Amazon Web Services): The market leader with the broadest service catalogue and the largest global infrastructure footprint. AWS has the most mature ecosystem of third-party integrations, the largest talent pool, and the most extensive compliance certification coverage. EC2 for compute, S3 for object storage, and RDS for managed databases are the foundational services most organisations start with. AWS is the default choice for organisations with no existing cloud vendor commitment and a need for maximum service breadth and global reach. Security services: AWS Security Hub, GuardDuty, Inspector, Macie, IAM Identity Center.
Microsoft Azure: The strongest choice for organisations with significant Microsoft investments: Active Directory, Microsoft 365, and Windows Server workloads integrate natively with Azure in ways that require significant additional work on competing platforms. Azure has the most consistent enterprise licensing model and strong hybrid cloud capability through Azure Arc. Microsoft Entra ID (formerly Azure Active Directory) is the leading enterprise identity platform and is tightly integrated with Azure services. Azure is the default choice for Microsoft-centric enterprise environments.
Google Cloud Platform (GCP): GCP has the strongest managed data and analytics services (BigQuery, Dataflow, Vertex AI) and is the choice for data-intensive workloads and machine learning applications. GCP’s network infrastructure provides competitive global performance and its Kubernetes engine (GKE) is the most mature managed Kubernetes offering. Google’s experience operating at hyperscale is reflected in its networking and storage performance. GCP is less dominant in general enterprise workloads but is the strongest choice for AI and ML-heavy architectures.
Alternatives: DigitalOcean, Hetzner, OVHcloud: For smaller organisations and development workloads, DigitalOcean provides a simplified interface and predictable pricing at lower cost than the hyperscalers. Hetzner is a European provider offering the lowest-cost dedicated and virtual server pricing with data centres in Germany and Finland, making it popular for cost-sensitive European workloads. OVHcloud provides European sovereignty compliance options for organisations with GDPR data residency requirements.
- AWS: broadest service catalogue, largest global footprint, most compliance certifications
- Azure: best for Microsoft-centric organisations, strongest hybrid cloud
- GCP: best for AI and ML workloads, strongest managed data services
- DigitalOcean: simplified IaaS for smaller teams, predictable pricing
- Hetzner: lowest cost for European workloads, strong bare metal options
- OVHcloud: European data sovereignty, GDPR residency options
How to Choose an IaaS Provider
Start with your existing ecosystem: If your organisation runs Windows Server, uses Active Directory, or already pays for Microsoft 365 Enterprise, Azure provides native integration that reduces migration complexity and cost. If you are an AWS shop already, the switching cost of moving to Azure or GCP rarely justifies the move unless a specific service or compliance requirement demands it. Existing tool and team familiarity is the strongest factor.
Evaluate pricing for your specific workload type: IaaS pricing varies significantly by compute type, storage class, data transfer volume, and geographic region. The hyperscalers all offer pricing calculators but the output is only meaningful when modelled against your actual resource consumption. Compute-heavy workloads, storage-heavy workloads, and network-transfer-heavy workloads have very different relative costs across providers. Get quotes from two providers and compare them against your actual usage data.
Check compliance requirements before committing: All three hyperscalers hold extensive compliance certifications covering SOC 2, ISO 27001, PCI DSS, HIPAA eligibility, FedRAMP (AWS and Azure), and many sector-specific frameworks. However, compliance certifications apply to specific services within each cloud, not the cloud as a whole. Verify that the specific services you plan to use hold the certifications you require, not just that the cloud provider holds them somewhere in their portfolio.
Plan your exit strategy: Cloud provider lock-in is a real risk, particularly for managed services with no equivalent on another provider. Using open standards where possible (PostgreSQL rather than proprietary databases, Kubernetes for container orchestration, Terraform for infrastructure as code) reduces the cost of moving workloads if pricing, service quality, or business requirements change.
DigitalOcean is the strongest overall recommendation for most small businesses: developer-friendly, transparent pricing, SOC 2 Type II and SOC 3 Type II certified, and a strong global data centre footprint. Hetzner Cloud is the better choice for maximum compute value per pound or euro, particularly for EU-based workloads where its ISO 27001 and BSI C5 certifications are relevant. Avoid hyperscalers until your stack genuinely needs their specific managed services or compliance certifications.
Significantly, for standard workloads. A 2 vCPU, 4GB RAM DigitalOcean Droplet runs approximately $24 per month, with 4TB outbound transfer included. The equivalent AWS EC2 instance runs $30 - 35 per month before data transfer, support plan, and storage costs. At scale with multiple services and meaningful egress, the difference can reach 40 - 60% total cost reduction depending on workload patterns.
Hetzner Cloud offers the lowest price per vCPU of any certified cloud provider in the European market and includes generous monthly transfer allowances - 20TB per server - at no extra cost. For US-based workloads needing US data centres, Vultr and DigitalOcean are the strongest affordable alternatives, with both offering 1 vCPU, 1GB RAM servers from around $6 per month. Cheapest isn't always right - certifications, support quality, and egress costs should all factor into the decision.
Egress fees are the largest hidden cost: AWS, Azure, and GCP charge $0.08 - 0.09 per GB of data out. Additional costs include snapshot and backup storage, load balancer monthly fees, Windows licensing on top of instance cost, and support plan charges. Affordable alternatives like DigitalOcean and Hetzner bundle generous transfer allowances with compute, which can dramatically reduce the true all-in monthly bill compared with a hyperscaler at similar compute specifications.
DigitalOcean is the better starting point for most early-stage SaaS teams: simpler pricing, lower cost, better developer experience for standard workloads, and predictable billing. Move to AWS when your stack genuinely needs its specific managed AI services, RDS at a scale that justifies the complexity, or enterprise compliance certifications like FedRAMP or HIPAA BAA that affordable alternatives don't hold.
IaaS gives you raw compute, storage, and networking that you configure yourself - you manage the OS, runtime, and application. PaaS manages the OS and runtime for you; you deploy code directly. IaaS is more flexible and often cheaper at scale; PaaS is faster to start with and requires less operational expertise. See our full SaaS vs PaaS vs IaaS guide for a complete breakdown.
Hetzner maintains a 99.9% uptime SLA and holds ISO 27001:2022 certification and BSI C5 Type 2 - the German federal cloud security catalogue. It's a well-established provider with a strong reliability record for European workloads. The primary limitation is data centre geography, primarily Germany and Finland, which is worth factoring in for applications with a global user base where latency to non-European users matters directly.
At minimum, SOC 2 Type II for any provider handling business data. ISO 27001 is the internationally recognised standard particularly relevant outside the US. FedRAMP applies to US government cloud requirements specifically. For regulated industries requiring HIPAA BAA or PCI DSS Level 1 compliance, a hyperscaler is the practical choice - those certifications aren't held by the affordable alternatives.
Egress is the charge for data transferred out of a cloud provider's network. AWS, Azure, and GCP charge approximately $0.08 - 0.09 per GB. DigitalOcean bundles generous monthly transfer allowances per server. Hetzner includes 20TB per server per month. Cloudflare R2 charges zero egress. For data-intensive applications serving large files or high traffic volumes, egress can represent 30 - 50% of the total cloud bill - making it one of the most important variables to model before choosing a provider.
Moving between IaaS providers is feasible with planning. The key steps: snapshot existing workloads, build equivalent infrastructure on the new provider, reduce DNS TTL ahead of cutover, run parallel for 24 - 48 hours, then cut over traffic. The biggest migration friction comes from proprietary managed services - AWS DynamoDB or Lambda-specific patterns - that have no direct equivalent on a different provider.