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Cloud's price race to zero: Microsoft cuts Azure pricing, eyes Amazon

Cloud computing costs are falling fast for IT buyers and are already on par with electricity rates.

Microsoft on Friday cut pricing on its Azure storage as you go service and its extra small compute effort.

The move comes just a few days after Amazon Web Services cut its pricing.

What's it all mean? Cloud computing costs are falling fast for IT buyers and are already on par with electricity rates. And given that electricity rates fluctuate based on natural gas prices, season and other variables cloud computing could be cheaper.

As for Microsoft, the company broke out the following details.

  • Windows Azure Storage Pay-As-You-Go pricing has been reduced by 12% ($0.14 to $0.125)
  • 6 Month Plans for Windows Azure Storage have been reduced across all tiers by up to 14%
  • Windows Azure Extra Small Compute has been reduced by 50% ($.04 to .$02)

The pricing isn't necessarily comparable to Amazon Web Services since the rates and services vary. But the overall gist is the same: Prices are going lower.

And Amazon's small on-demand instances are cheaper than what I paid for electricity in January. Amazon charges 8 cents an hour for a small Linux/Unix instance and 11.5 cents for a Windows instance. I paid nearly 13 cents a kilowatt hour for electricity in January.

Microsoft said that it is just passing along the savings to customers. Funny, that's what Amazon says. Both are wooing developers, startups, small businesses and enterprises. Once HP and others enter the compute cloud market, the prices will go even lower.

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