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Amazon and Microsoft Escalate Cloud Price War

If there was any doubt that Amazon Web Services (AWS) and Microsoft would keep their cloud price war alive in 2016 and beyond, both companies jumped into the new year with their latest round of cost reductions.

AWS made the first move last week reducing pricing of EC2 instances by 5%, with Microsoft following suit yesterday  by slashing the cost of Windows Server and Linux Azure Dv2 VM instances by up to 13% and 17% respectively. The moves come as both companies aggressively court enterprise IT decision makers to move or share datacenter workloads and data to their public clouds.

Microsoft yesterday acknowledged the price cuts were in line with its commitment to keep its costs in check with AWS. Nicole Herskowitz, Microsoft's director of Cloud Platform marketing, argued that Azure customers with Enterprise Agreements will enjoy an even lower price than Amazon. In a blog post, Herskowitz pointed to a number of other advantages.

"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," she stated. "For developers, Microsoft provides up to $150 free Azure credits per month along with discounts for Dev/Test workloads through the Microsoft Developer Network program. Any developer will be able to get $25 free Azure credits per month for one year with the Dev Essentials program coming soon."

Herskowitz added that Microsoft's Azure prepurchase plan offers a 63% savings when buying VMs for a full year. "If you're moving a significant number of workloads to the cloud and are looking for great pricing with lots of flexibility, check out the Azure Compute option," she noted. "With this program, you can run any compute instance in Azure and realize discounts up to 60% in exchange for add-ons to your Windows Server annuity licenses."

The Dv2 VMs, based on Intel Xeon Haswell processors, are 35 percent faster than the Dv1 processors, Herskowitz emphasized, while also noting that the company's Dv2 instances, unlike AWS EC2 instances offer, load balancing and auto-scaling with no additional charge.

For its part, most of AWS price cuts apply to Linux instances. Specifically, AWS cut the price of its On-Demand, Reserved Instances and Dedicated host prices (for its C4, M4 and R3 instances) in specified regions running Linux by 5%. Less significant reductions apply to Windows, SLES and RHEL instances. AWS said last week's price cuts were its 51st with some retroactive to Jan. 1, with others to be phased on during the coming weeks. AWS said it will update its price list API in the coming weeks.

Posted by Jeffrey Schwartz on 01/15/2016 at 12:11 PM


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