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Enterprise


Microsoft slashed prices on several of its cloud computing services the company announced on Monday, following through on a standing promise to match Amazon Web Services, which made similar cuts last week.

The software giant made the announcement in a blog post by Windows Azure general manager Steven Martin, saying it will slash prices on various services by 27 percent to 65 percent. “We recognize that economics are a primary driver for some customers adopting cloud, and stand by our commitment to match prices and be best-in-class on price performance,” Martin wrote. The move coincided with Microsoft’s Build conference taking place this week in San Francisco.

It’s the latest move in what’s turning out to be a brisk price war for cloud computing services. Last week, Amazon announced a broad-based price cut on many portions of its Amazon Web Services by 36 percent to 65 percent. That came a day after Google slashed prices for its Google Cloud Platform from 32 percent to 85 percent.

The smallest price cut from Microsoft is on its general purpose virtual machine, which it calls “basic,” which will cost 27 percent less than before. Cloud customers typically lease the use of a virtual computer on a cloud server in order to take the place of what would otherwise require the purchase of a physical computer, and pay for it on an “as you go” basis. The starting price on the service is about $15 per month. The largest cut is on Azure’s Block Blob storage service, which is as much as 65 percent, where the lowest price available — depending on the amount of data stored — starts at $0.0224 per terabyte per month. The new prices take effect on April 3.

One cloud player you won’t see joining the race to the bottom is IBM’s SoftLayer, the cloud division Big Blue acquired last year for about $2 billion. “From an IBM perspective we don’t want to be associated with being the low-cost leader in the cloud,” SoftLayer CEO Lance Crosby said in an interview. He said the three are basically vying for market share.

Amazon is generally considered the market leader in terms of computing capacity available and the overall number of customers, but IBM has lately sought to argue that its combined portfolio of cloud services and applications commands higher revenue, making it the cloud’s market leader.

Ben Uretsky, the CEO of DigitalOcean, an upstart cloud-based Web hosting company that competes directly with Amazon’s basic hosting service, said the price cuts are overdue.

“It’s about damned time,” he said. “A 40 percent reduction means they have been overcharging customers since day one,” he said, specifically referring to Amazon. He said he expects more price cuts over time as Amazon and other players continue to jockey for more customers.

DigitalOcean last month landed a $37 million venture capital investment led by Andreessen Horowitz.

Re/code’s Liz Gannes contributed to this report.



3 comments
Emil Sayegh
Emil Sayegh

Google and Microsoft are cutting prices because they can’t gain traction on AWS in the cloud market except in particular niches. What they are missing is that they are not different enough from AWS to win, so they resort to this price race to the bottom. We wish them luck, but our bet is on AWS. We are getting popcorn, a good seat, and watching these guys diminish each other’s margins. 


What these big companies need to learn is that to win you have to be different — Business 101, right?  Google, Microsoft and now Cisco have no differentiation whatsoever from AWS. They are late to the game and “me too” with that! They neither have the breadth of offerings nor the scale to match AWS.  


The future is a hybrid solution because not all workloads are suited for the cloud. A hosting provider that creates a cloud environment that allows users to spin up cloud and “bare metal servers” can best serve an enterprise. This is how you compete with AWS. Otherwise, imitation is the best form of flattery to your competitor (AWS).

Miguel
Miguel

Did I miss something?  Microsoft and Google have 'ruined' the cloud by sharing all our 'private/secure' information with NSA, TSA, CIA, NWO and everyone on the planet that asks for it.  So now they HAVE to reduce prices in order to sway customers.  Sure, let me put ALL my company and private information on their servers??  what harm could it do, right?   

I Love Amazon as a company but even they use my information to blast me with ads all over the internet. So if I am on one of their cloud servers do I get ads for software renewals and things they notice on my cloud server with them??


It's gone too far too fast folks.  Get some space at Rackspace or someone else I say.

ScottB
ScottB

Our organization leases the use of a virtual computer on a cloud server so that we didn't have to purchase a computer. We've been pleased with Windows Azure.  We "pay as you go." Set up was complicated. We hired a consultant to come in and assess our cloud infrastructure. It worked out well. If you're thinking about whether or not cloud computing will benefit your enterprise, this is a good resource. It helped us decide: www.innovativearchitects.com/cloud-jump-start.aspx

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