In the last six months the continued decline in pricing for IaaS is a signal that more business is sought.
IBM thinks that the prices and profit margins for x86s will be under continual pressure and they sold their server business to Lenovo. This shows that IBM thinks that the server hardware is already commoditized, so few more cost reductions in basic cloud infrastructure can be expected.
From a supplier perspective: The lower prices can be a signal that IaaS might actually become a loss leader to get users into the cloud store and then to PaaS and SaaS offerings. They will try to sell basic IaaS users other cloud services on top of IaaS.
From a user (IT Department) perspective: IaaS displaces only hardware cost; PaaS displaces hardware, OS and middleware costs; and SaaS displaces all application costs.
Amazon, Google, Microsoft and other cloud providers need a customer base so they can sell their cloud-specific services on PaaS and Saas. Price reductions for IaaS will keep that base, and opportunities to upsell into the emerging cloud-specific service market will grow.
Every cloud will be potentially a hybrid, so users and providers will rely on deployment and management tools that converge on a common model.