Microsoft Joins Amazon and Google in Cloud Price War
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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.