Microsoft Parries AWS Price Cuts with Azure Reductions

Microsoft on Thursday announced another round of price reductions for its Azure public cloud, despite indications that the price war between it, Amazon Web Services Inc. (AWS) and Google may be approaching a détente.

The price cuts, which affect Azure Dv2 Virtual Machines, are a direct response to AWS' move last week to lower the price of several Elastic Compute Cloud (EC2) instances by up to 5 percent.

In turn, Microsoft is reducing the cost of running Azure Dv2 instances on Linux and Windows Server by as much as 17 percent. The new Azure Dv2 prices will take effect early next month.

As an example, Microsoft provided the following table to show the reductions for its U.S. East 2 (Virginia) region:

Virtual Machine Type Price Reduction (Windows Server Instances) Price Reduction (Linux Instances)
D1-D5 v2 10% 14%
D11-14 v2 13% 17%

Microsoft also noted in its announcement that "Azure Dv2 instances -- unlike AWS EC2 instances -- have load balancing and auto-scaling built-in at no additional charge. This means you get even more value from Azure."

While AWS is still the market leader in the public cloud space, Microsoft's Azure offering is considered to be its closest viable competitor in terms of geographic scope, customer base and cost. To that final point, Microsoft has made no secret of its practice of matching each AWS price cut with reductions of its own. Thursday's price cuts reflect Microsoft's "longstanding commitment" to match AWS on commodity cloud pricing, the company said.

Microsoft trumpeted other advantages of using Azure over AWS.

"For customers with Enterprise Agreements, you not only get price reductions like these, but also your price points are even lower -- in many cases well below available AWS pricing -- re-enforcing our commitment to be the number one enterprise cloud," the company said, adding, "Unlike AWS, Azure virtual machine usage is billed on per-minute rate so you only pay for the compute that you use. With AWS you pay for an hour even if you only use a few minutes."

For its part, Google -- which has also participated in retaliatory pricing strategies against Microsoft and AWS -- responded to AWS' price cuts late last week with a statement proclaiming its position as "the price/performance leader in public cloud."

Ironically, this current back-and-forth between AWS, Microsoft and Google over cloud pricing comes just as a new report suggests that the intense price competition of recent years has led to more stable cloud costs today.

"Into 2016, the cost of the public cloud appears to have reached a price point which is now relatively stable," according to the report conducted by Tariff Consultancy (TCL) released this week.

About the Author

Gladys Rama (@GladysRama3) is the editorial director of Converge360.


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