Azure continues to cut prices. Is this the end of the cloud price war?

Microsoft announced this week that it will cut prices for its D-Series virtual machines by as much as 17% next month, and it has also issued a warning to Amazon Web Services (AWS) by offering free services that its competitors provide for a fee. challenge.

Microsoft's price cut news comes a week after Amazon cut the price of its elastic cloud instances by 5% in the C4, M4 and R3 series. Afterwards, Google pointed out tit-for-tat through a blog post that Google's cloud platform pricing is still the cheapest among several hyperscale providers.

After the cloud world had just spent a relatively quiet year in 2015, the cloud price reduction war suddenly broke out. But over the past few years, cloud vendors have focused more on cloud add-on feature sets.

“This is the story of how Microsoft and Google struggle to stay in the top spot while people choose to use AWS as a troika,” said TBR, senior analyst at Hampton, N.H.-based Technology Business Research Jillian Freeman said.

Core capabilities such as storage, compute and capacity remain the biggest revenue generators for these cloud providers, and cloud price reductions become less of an issue as higher-tier services come into play, Freeman said.

"I don't think there's much chance of another price war because people want a lot more from the cloud than that," she said.

New York-based 451 Research provides a service called the Cloud Price Index, which calculates the total cost of ownership for running workloads on different cloud platforms. They found that overall prices have dropped by only 2.5% from the same period last year. percentage points.

Owen Rogers, a research director at 451 Research and the architect of the Cloud Price Index, said he does not expect the price war that broke out in the cloud market in mid-2014 to happen again in any form in 2016. He said it's no coincidence that a new round of cloud price cuts comes just as many executives are struggling with budget execution for the coming year.

The cloud price reduction trend ends here

Agolo is a New York-based startup that organizes and customizes social networks and news. In 2014, they moved the company's main business to Azure after receiving credit from Microsoft. At the same time, some of the company's original systems remain in AWS.

“See every email update in the market and see how competition is driving prices down,” said Mohamed AITantawy, CTO and co-founder of Agolo. "There's no doubt that for a startup like us, price cuts are fairytale-like.

" Still, price cuts and credits are just a small slice of pizza for cloud customers. Agolo has rejected cheaper products pitched by other vendors because the feature sets they offer aren't powerful enough, AITantawy said. From his personal experience, as newer services continue to come online, the prices of older services will gradually decrease.

"When you start using these new capabilities, you'll find that you're essentially using resources on demand and spending more money than you save," AITantawy said. That's not necessarily a bad thing, he added. “Because if you can use resources on demand, use new features and have more bandwidth, then that means the service is running and users are able to use it.

” Related price reductions will apply to Dv2 virtual machines, ranging from 10% for Windows instances using the D1-D5 v2 virtual machine type to 17% for Linux instances using the D11-14 v2 virtual machine type, Microsoft said in a blog post Published in.

In addition to simple price reductions, Microsoft points out that unlike AWS EC2, Dv2 instances include load balancing and autoscaling at no additional cost, and their billing time units are minutes instead of hours.

Google has always been a major promoter of price reductions in the cloud market, which has become a major means of promoting its platform. Although Google did not announce a price cut last week, the company did respond in a post on its official Weibo. After this latest round of price cuts, the price of its computing resources is 15% to 41% lower than AWS in any region. .

Ultimately, neither a price cut nor a minimum price per virtual machine automatically translates into cost savings that can be compared to another vendor because it all depends on the application's needs, Rogers said.

"This is a nightmare for consumers," Rogers said. "One cloud provider is talking one thing, and its competitors are talking west - they are talking about price rather than performance."

In addition, it is difficult to say which provider provides the cheapest virtual machine price in the cloud market, because there are many other factors that affect the cost of virtual machines, such as bandwidth, hosting services, databases, bare metal, etc. Rogers pointed out.

"The price is really a small fraction of all the potential services in each cloud," he said.

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