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

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

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

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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.

Related:

Topics: Software, Amazon, Cloud, Microsoft, Operating Systems, Windows

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17 comments
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  • Not to zero

    It's a utility: cost + a few %... until one of them gets some leverage and can start to jack up the prices...
    rbradbury@...
    • Lock in is the goal

      If you thought lock in on the desktop was a problem, you ain't seen nothin' yet.
      x I'm tc
  • Also shows which TCO is lower.

    It shows 8 is less than 11....
    jessepollard
  • Apples and Oranges

    You wrote:

    "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."

    And your point is WHAT? The cloud rates for a small Linux/Unix instance also costs about the same as a piece of bubble gum at the convenience store. Is that relevant too?

    And if I decide to quote the price of electricity per Wh or MWh you are so far off that it is not even funny. So just because we happen to quote residential electrical power prices per KWh, that somehow makes price parity to some arbitrary cloud rate relevant? And of course you pick a "small instance". I guess you cannot get "tiny" ones, cause that would mess up your comparison also.

    I think this is the most ridiculous and irrelevant comparison I have ever seen posted on this site. If you had compared the price of the cloud service as a multiple of the cost of the power required to provide it, along with some historical trends, you MAY have had something reasonably interesting and relevant.

    Sheesh
    D.T.Long
    • @D.T.Long

      +100
      waasoo
  • Electricity Prices US vs US.

    In the UK, it's nearly 19 cents/Kwh for Elec.....
    But, while I'm at it Household Gas is 6 cents/Kwh, Unleaded Petrol is equiv. to $7.90 a US gallon !
    hawkeye-uk
    • Petrol

      Hey Hawkeye-uk, what kind of Octane ratings do you get at the pump? We choose from 87, 89 or 92 but most are diluted with up to 10% ethanol.
      dono86
  • Microsoft is using some of the monopoly money...

    To try and create another monopoly? I believe what Microsoft is doing is called "dumping", which is technically illegal. Maybe the DOJ needs to start another investigation, ASAP.
    Jumpin Jack Flash
    • I agree,

      the DOJ should start investigating this new M$ scheme.
      The Linux Geek
    • Better check your vocabulary

      Dumping: In economics, "dumping" is any kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market, or in quantities that cannot be explained through normal market competition.
      dono86
  • It's ASP all over again

    Interesting parallel. ASPs vanished because they couldn't make the numbers work. They couldn't cram enough users on a shared server to reach break even. We're heading there again as the market share battle heats up.
    denden11
  • It's called being competitive folks

    And how, Mr. Jumpin Jack Flash, is Microsoft "dumping" by lowering its prices to compete with Amazon and other cloud providers? If they can afford less of a profit margin in an area they are competing in they are free to do so (take WalMart for example). I think you need to review the definition of dumping. Stop believing and start knowing.

    Dumping: In economics, "dumping" is any kind of predatory pricing, especially in the context of international trade. It occurs when manufacturers export a product to another country at a price either below the price charged in its home market, or in quantities that cannot be explained through normal market competition.

    No exporting? No dumping.
    dono86
    • If they tempoarily lower the price to drive a competitor out.

      Only to raise the price, once they gain a monopoly position; it is still dumping. This is something Microsoft has done in the past. Do you think Office was always priced beyond the reach of 99% of the population? Seriously $400 to $800 for word processing software? No when Microsoft was trying to gain the monopoly postition Office was cheaper than the competition. Once the competition was gone the price doubled in a few years. Expect more of the same, if Microsoft gains the monopoly share of cloud services.
      Jumpin Jack Flash
      • Wrong.

        The current prices for single user for Office 2010 are:

        $119 for Home & Student
        $199 for Home & Business
        $349 for Pro
        MSFTWorshipper
  • What are you paying them for?

    Amazing! I have to pay money to allow someone else to hold my data for me, lose it, get it hacked, turn it over to any government agency that asks for it, and occasionally make it non-available to me because of Internet outages, massive data traffic jams, etc.

    Thank you, but I'll stick to non-cloud usage -- and save money, too!
    Shara8
  • Price cut impact on App design

    Interestingly, the price reduction also has profound implications on how we design and build applications.
    Based on the recent Azure price reduction, we quickly tweaked our application to save a non-trivial amount every month. More analysis here
    http://www.opstera.com/blog/bid/112603/windows-azure-price-reductions-impact-on-your-architecture
    paddix
  • More predatory antics in a world that devalues everything it touches.

    Not much left to say...
    HypnoToad72