Microsoft Azure continues cloud pricing game of limbo with AWS, Google

Microsoft will lower its Azure cloud prices to match price cuts made by AWS and Google, but is it enough to attract new customers?

Some things in life are certain – death, taxes, and cloud providers slashing prices.

What is not certain, however, is whether the latest pricing cuts from Microsoft Azure will attract new customers.

Microsoft cut its Azure compute prices by 27% to 35% and cloud storage up to 65%, effective May 1. Azure Memory-Intensive Linux instances will see a 35% reduction, while Windows instances drop 27%. The price drop comes a week after Amazon Web Services (AWS) lowered its pricing to match Google Inc.'s Cloud Platform.

"I think it was a necessary move from Microsoft [to keep pace with AWS and Google]," said Larry Carvalho, research manager for Platform as a Service at IDC, an IT research firm based in Framingham, Mass. "For a company as large as Microsoft, this price will not make a difference, they've got such a big cash flow."

The ongoing cloud pricing wars might attract startups looking to save as much as possible, Carvalho said, but not necessarily established enterprise IT shops that simply need the best platform from a provider,whether it costs a little more or not.

"Amazon provides a virtual private cloud. That would make the difference to me more than price," Carvalho said.

Whenever one cloud provider lowers its prices, competitors are expected to quickly follow suit, said Rob Sanfilippo, research vice president with Directions on Microsoft, an independent analyst firm based in Kirkland, Wash.

"Microsoft has regularly adjusted prices on its Azure services to stay competitive with other cloud offerings," Sanfilippo said. "The prices have always been adjusted down, benefitting customers with more compute and storage services for the same money."

He likened the cloud pricing wars to the airline industry reducing rates for particular routes to undercut competitors.

"Microsoft will continue to move aggressively to attract customers to Azure," he said. "Likely with net profits being a lower priority than market share at this time."

Azure also introduced its Basic instance offering which goes live this week, and costs 27% less than its Standard instances, but without autoscaling and load balancing features.

The Basic instance is designed for production applications that don't require the Azure load-balancer, development workloads, test servers and batch processing applications, according to Microsoft.

Last week, AWS made a 65% reduction to its Simple Storage Service prices at 3 cents per hour, and m1.small instance pricing for Elastic Compute Cloud to 1.1 cents per hour, down from 1.5 cents.

Google, meanwhile, will charge 7 cents per hour for Standard instance types hosted in the U.S., and its Google Cloud Storage will be priced at 2.6 cents per gigabyte, a 68% reduction for most.

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