Amazon Cuts Cloud Pricing Again -- Redmondmag.com

The Schwartz Cloud Report

Amazon Cuts Cloud Pricing Again

Once again, Amazon Web Services said it is cutting the price of its cloud offerings, including its Elastic Compute Cloud (EC2), Relational Database Service (RDS) and Elastic MapReduce (EMR) offerings.

This latest reduction marks the 19th time Amazon has cut prices of its cloud services in the six years since launching them. Just last month, Amazon reduced pricing for its Simple Storage Service (S3) and Elastic Block Storage (EBS) offerings.

"Driving costs down for our customers is part of the DNA of Amazon and therefore also part of the DNA of AWS," said Amazon CTO Werner Vogels in a blog post. "We will continue to drive AWS prices down, even without any competitive pressure to do so. And we will work hard to do this across all the different services."

The cuts will amount to a 6 percent savings for usage of the On-Demand version of EC2 and 33 percent for its Reserved Instance offerings. For RDS, Amazon is reducing On-Demand prices by up to 10 percent and Reserved Instances by up to 42 percent. AWS evangelist Jeff Barr provides a complete rundown in a blog post.

While Vogels may say there's no competitive pressure to lower Amazon's prices, it comes just two weeks after Microsoft announced it is lowering prices for some of its SQL Azure service and just months after simplifying prices for Windows Azure. Google this week also lowered its cloud storage pricing, PCWorld reported.

Nevertheless, here's Vogels' reasoning:

"Reducing pricing is not just a matter of passing on the benefits of economies of scale, although that certainly plays a role," he writes. "Experiences with the highly scalable, ultra-efficient supply chains of Amazon.com drive great new innovations in the highly redundant supply chains for AWS, which lead to new efficiencies that we can pass on to our customers. Also on the business model side, we continue to innovate, as the introduction of Reserved Instances and Spot Instances have helped customers make significant savings."

Is Amazon upping the ante -- or should I say lowering the ante -- for cloud service pricing? Leave a comment below or drop me a line at [email protected].

Posted by Jeffrey Schwartz on 03/08/2012 at 1:14 PM

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