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Price war! Amazon cuts cloud costs to counter Google

Amazon's announcement comes the day after Google said it is cutting prices

By Joab Jackson
March 26, 2014 04:40 PM ET

IDG News Service - The price war among major cloud providers continues, with Amazon Web Services announcing Wednesday that it is lowering the prices of a number of its cloud services, one day after Google slashed prices.

Amazon Web Services Senior Vice President Andy Jassy downplayed any idea that the price cuts were competitive in nature, however.

The round of price cuts, which take effect Tuesday, will be the 42nd for the company since its launch eight years ago, he said.

"Lowering prices is not new for us. It is something we do on a regular basis. Whenever we can take costs out of our own cost structure, we give them back to our customers in the form of lower prices. We should expect us to continue to do this periodically," Jassy said, speaking at the Wednesday at the AWS Summit in San Francisco.

Nonetheless, the news comes a day after competing cloud service provider Google announced price cuts, citing the plummeting costs of hardware.

The price of AWS' Simple Storage Service (S3) is being reduced, on average, 51 percent. The company's Elastic Cloud Compute (EC2) has been reduced by 30 percent to 40 percent for the latest generation of compute nodes. AWS' Relational Database Service (RDS) has been cut by 28 percent, on average. ElastiCache service has been reduced by 34 percent on average and Elastic mapReduce has been lowered by 27 percent to 61 percent.

On Tuesday, Google announced Google Compute Engine (GCE) would now cost, on average, 32 percent less. Google Storage was been cut, on average, by 68 percent. Google BigQuery on-demand analysis services were reduced, price-wise, by up to 85 percent.

While Jassy downplayed any competitive price pressures from Google, Microsoft Azure or an increasing number of other cloud providers, he did take the opportunity to make the case of using public clouds over private clouds, in which an organization sets up an in-house cloud service for its operations.

The continual cloud price cuts make it hard to justify continuing to run in-house operations, which would be far more expensive, both in terms of hardware costs and maintenance costs, Jassy argued.

Jassy cited a number of enterprises and Internet services that have moved operations to the AWS cloud, including Nintendo, Netflix, AirBnB, NASA, Pinterest and ERP (enterprise resource planning) service provider Infor, which is shifting many of its services over to AWS.

"Friends don't let friends build data centers," Infor CEO Charles Phillips said in his presentation during the keynote.

For the U.S., the European Union and Asia-Pacific customers using the Singapore data center, S3 storage will begin at US$0.03 per gigabyte per month, and $0.024 per gigabyte per month for reduced availability. Currently, AWS S3 storage for these regions cost $0.094 per gigabyte per month and $0.075 per gigabyte per month.

Reprinted with permission from IDG.net. Story copyright 2014 International Data Group. All rights reserved.
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