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Microsoft Azure prices drop following Amazon, Google cloud rate cuts

Three major cloud vendors slashed rates in one week, claiming the cuts were coincidental. Others say this signals a downward pricing trend.

After Amazon and Google both cut prices for some cloud infrastructure services early last week, Microsoft jumped on the bandwagon and lowered Windows Azure rates.

While the cuts aren't directly comparable because of variations in the way each company structures its cloud offerings, the timing reinforces the premise that cloud infrastructure costs are plunging. That, in turn, drags down competitors' prices across the board. And the race is on to pass at least some of those savings on to customers.

Thursday, in a "me too" move, Microsoft said it had cut rates for both pay-as-you-go storage in Windows Azure as well as for customers that choose to pay for storage on six-month contracts.

Additionally, the software giant slashed the price for an Extra Small Compute instance by half -- from $0.04 to $0.02 per hour, said Steven Martin, general manager of Windows Azure business strategy and planning, in a blog post.

"The price cuts were aimed at two major Windows Azure market segments,” said Roger Jennings, a Windows Azure MVP and developer. “Users new to Windows Azure or using it to host a website or blog on Extra Small Compute instances, and enterprises who are ready to pony up in advance can take advantage of commitments to six-month plans."

The reduction in pay-as-you-go storage prices is basically meeting competition for what’s quickly becoming a commodity.

Roger Jennings, Windows Azure MVP and developer

Last Monday, Amazon reduced rates for Elastic Compute Cloud (EC2), as well as Amazon Relational Database Service (RDS), Amazon ElastiCache and Amazon Elastic MapReduce. It was the nineteenth Amazon Web Services (AWS) pricing cut in six years, Amazon officials said.

As a partial comparison, a small Amazon-hosted website that cost $876 per year using pay-as-you-go on-demand pricing in 2006 would cost $250 per year today if the customer converted to a year or three-year contract. A "micro" Amazon EC2 instance with pay-as-you-go pricing currently costs $0.020 per hour, running on Linux or Unix, or $0.030 running on Windows.

Tuesday, Google cut pricing for Google Cloud Storage, retroactive to March 1. The starting rate for customers storing less than a terabyte is now $0.12 per gigabyte, down a penny from the previous rate of $0.13. Cuts vary from 7.69% at the low end to 15% off -- a decrease from $0.10 per gigabyte to $0.085 -- to store between 100 and 500TB.

Microsoft, meanwhile, cut Azure's pay-as-you-go storage rate to $0.125 per gigabyte, a 12% drop from the previous rate of $0.14. Customers who pay for cloud storage on a six-month-contract basis see a reduction of 14%, Martin added.

Prices notwithstanding, Microsoft's Martin argues that value-added features differentiate Azure's services. For instance, he emphasized data protection features in Azure.

"While the reduced price ... provides cost benefits, geo-replication differentiates Windows Azure Storage from other services in market," Martin added.

Though these vendors say the price cuts are unrelated, industry watchers say the timing of these three announcements is more than coincidence. "The reduction in pay-as-you-go storage prices is basically meeting competition for what’s quickly becoming a commodity," Jennings said.

Stuart J. Johnston is Senior News Writer for Contact him at

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