Microsoft plays 'follow the leader,' cuts Azure cloud storage costs

In a move to remain competitive, after Amazon and Google cut cloud storage rates, Microsoft follows suit, slashing Azure storage by 28%.

The price of cloud computing continues to drop -- but the effect on IT departments remains marginal at best.

In a virtual replay of last March, Microsoft lowered prices on Windows Azure cloud storage this week just days after Amazon Web Services (AWS) and Google did the same.

However, many users and analysts view the move as just the latest play in a price race to the bottom. The good news for IT pros is that cloud costs continue to fall, but since all three are dropping rates virtually simultaneously, the net effect on the cloud storage market is not large.

Microsoft will cut storage rates for users of its public cloud offering by as much as 28% as of December 12, according to a post on the company's Windows Azure Team Blog, Wednesday.

"Regardless of the math, Microsoft's price reduction will have little or no market effect," said Roger Jennings, a Windows Azure MVP and developer in Oakland, Calif.

With a new round of storage price cuts, Microsoft is left in the unenviable position of trying to at least match or beat the competition's prices.

"Price cuts always make things more attractive [but] it's just another round of cuts [and] Amazon is very strong, so that's the main target," said Rob Sanfilippo, research vice president at Kirkland, Wash.-based research group Directions on Microsoft.

Microsoft follows AWS, Google's lead

Amazon has lowered prices 24 times in the past six years and, as the largest purveyor of public cloud services, the company constantly drives prices ever lower, as it did in March.

Regardless of the math, Microsoft's price reduction will have little or no market effect.

Roger Jennings, a Windows Azure MVP and developer

At that time, Amazon and Google announced rate cuts for various components of their cloud services, which included some storage rates, followed almost immediately by similar decreases by Microsoft. The vendors' offerings are not directly comparable because their technology implementations and pricing schemes are different.

Last week, Amazon and Google again dropped storage prices, effective December 1. Google cut costs for its cloud storage by approximately 30%, followed by Amazon at its AWS re:Invent 2012 cloud conference in Las Vegas, which lowered its Simple Storage Service (S3) prices by about 25%.

That left Microsoft once again needing to cut its storage rates in order to keep up.

"The main impact on IT is the demonstration that one of their key vendors is committed to doing what is necessary to keep their customers whole in the face of downward market price pressure," said Mark Eisenberg, director at enterprise application and cloud integration firm Fino Consulting based in New York City.

"Microsoft was compelled to remain competitive [while] the impact on Amazon and Google is the loss of any competitive price advantage."

Still, Eisenberg does not view the ongoing price war as a threat to Microsoft's cloud ambitions.

Cloud pricing details

Under Microsoft's new pricing, the first gigabyte of geographically redundant storage on Azure Storage will cost $0.095 per month, while the first gigabyte of "locally redundant" storage will cost $0.070. Geographically redundant storage means that the data is stored in locations separated by at least 400 miles in order to minimize the risk of data loss in an outage.

For comparison, Amazon's S3 standard storage costs $0.095 per gigabyte per month for service that is roughly equivalent to Azure's geographically redundant offering, or $0.076 for "reduced redundancy storage," which is similar to Azure's locally redundant storage.

Meanwhile, the changes to Google's pricing are a bit steeper. Google has slashed its standard storage -- also similar to AWS's standard storage -- to $0.085 per gigabyte per month and its "durable reduced availability storage" to $0.063 per gigabyte per month.

"What this really says is that there is plenty of room to cut margins before anyone feels any pain, but right now, AWS still sets the table stakes, said Carl Brooks, an analyst for infrastructure and cloud computing at Tier1 Research, a division of 451 Research, based in New York City. It's all good for end users."

Stuart J. Johnston is Senior News Writer for SearchCloudComputing.com. Contact him at sjohnston@techtarget.com.

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