Just when it seems things are beginning to settle down in the public cloud, Microsoft has declared that it will dramatically lower prices on Windows Azure in a bid to match the cuts arch-nemesis Amazon unveiled during last week’s AWS Summit in San Francisco. That move was itself a response to the sweeping cost reductions Google introduced two days earlier at its own cloud conference.

Since early 2012, the Redmond, WA software maker has consistently matched Amazon’s price drops within days of the latter announcing them, a practice that was officially enshrined in the company playbook the following year. This week’s markdowns, which come just two months after the previous round of price cuts, are among the biggest the software giant has made since launching its cloud platform in 2010.

Microsoft is shaving as much as 35 percent off storage and 65 percent off compute rates, Steve Martin, the general manager for Azure, revealed in a Monday blog. Additionally, the firm is rolling out a new type of virtual machine that will cost 27 percent less than the standard general-purpose instances available today. The catch is that it doesn’t include automatic scaling and load balancing. That’s an acceptable trade-off for most test and development workloads, as well as some production applications that have this functionality built-in.

Martin wrote that the changes underscore Microsoft’s commitment to be a part of the race to zero, but stressed that his company does recognize there’s more to cloud computing than just cost reductions. “While price is important, and something that will continue to grab headlines, there are three key factors at play in cloud computing: innovation, price, and quality. Innovation and quality will prove far more important than commoditization of compute and storage,” he noted.

Cloud first

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Microsoft had gotten noticeably more aggressive about IaaS since Satya Nadella took over the reins from Steve Ballmer in February. The cloud has long been a core focus for Nadella, who counts it as a central pillar of the modern enterprise.

“The key thing for us is bootstrapping our cloud business,” Nadella told SiliconANGLE in an interview at Accel Partners Symposium, back when he still ran Microsoft’s Server and Tools Business. “We’ve got some fantastic traction with Office 365 … many customers who are coming to Office 365 never bought an Exchange server from us, so it’s not even zero-sum in the short run. Azure is a natural complement to any customer who’s already got Office 365; SharePoint Extensions; end-user BI [Microsoft Business Intelligence End-user Tools 360°], Active Directory – all of these are very natural extensions.”

Applications, and more specifically developers, also constitute an integral element of Microsoft’s enterprise strategy. The company has made that clear at its Build conference this week, where the new Azure pricing is being touted alongside a long list of enhancements that underscore its goals for the software-defined datacenter and cloud.

“When it comes to the core of the enterprise and their move to the cloud, we’re a pretty major player,” he summarized. “And if anything, we want to be solving the here-and-now practical problems with a forward-looking vision around identity, around consistency of the management plane, around virtualization compatibility, around the application platform.”

We heard the same theme at last week’s AWS Summit, where Amazon introduced a slew of new features specifically designed for large enterprises and government agencies. Joel Davne, the CEO of Philadelphia-based cloud consultancy Cloudnexa, told SiliconANGLE at the event that the immediate bottom line benefits of using the cloud are secondary to its ability to remove traditional technology adoption barriers.

“This is why all of our customers are driving to cloud computing. They want to plug into a lot of innovation and they also want to take advantage of those deep price cuts,” Davne said. “It’s not really a race to the bottom, it’s a race to consume logical technology that a lot of firms – both large and small – had difficulty consuming.”

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