Google fires first volley in new cloud pricing war

Google has dropped the prices of all its Google Compute Instances.

How low can cloud prices go? On May 18, Google announced that it was cutting the price of its Google Cloud Platform prices by as much as 30 percent.

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Last year, we saw Amazon, Google, and Microsoft battle it out in a race to the bottom for cloud pricing. After a relatively quiet 2015, Google has restarted the transformation of cloud services to commodity priced services.

Google stated that the company is reducing the prices of all Google Compute Engine Instance types. Indeed, Google now claims that Google Cloud Platform is now 40 percent less expensive for many workloads.

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The exact price reductions are:

  • Standard: 20 percent
  • High Memory: 15 percent
  • High CPU: 5 percent
  • Small: 15 percent
  • Micro: 30 percent

To put this into context, 451 Research found, in its fall 2014 Cloud Price Index (CPI), that the average price for a typical Web application was $2.56 per hour. This was the average quote from a range of cloud providers based on a specification of a typical multi-service cloud application.

AWS, Microsoft Azure and Google Compute Engine were able to offer slightly cheaper prices at an hourly average of $2.36. Therefore, a standard Google Compute Engine might run such an application for approximately $1.90 an hour.

Google is also introducing a new class of pre-emptible virtual machines (VM) that deliver short-term capacity for a very low, fixed cost. These are designed for short-duration batch jobs. Pre-emptible VMs are identical to regular VMs, except availability is subject to system supply and demand. Since Google runs pre-emptible VMs on resources that would otherwise be idle, Google can offer them at substantially reduced costs.

How much cheaper? Google claims that a pre-emptible VM will save 70 percent over an ordinary Google Compute Engine VM.

Don't believe Google? You can do the math yourself with Google's TCO Tool. But keep in mind: Every previous time that one of the big cloud providers dropped their prices, the others followed suit. May the best cloud service for the lowest price win.

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