Analysis: Google undercuts Amazon’s cloud pricing

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Amid a flurry of enterprise cloud-related announcements at its annual Cloud Next conference in San Francisco, Google Inc. fired the latest salvo in the ongoing cloud price wars.

The tech giant launched “Committed Use Discounts” for customers who commit to its Compute Engine service in the long-term. The company also said it’s cutting prices for the same service by up to 8 percent.

Committed Use Discounts is on offer to Google Cloud Platform’s enterprise customers who make a one or three-year commitment to using Compute Engine, with discounts of between 37 and 55 percent respectively. The offering is similar to rival cloud firm Amazon Web Services’ Reserve Instances program, and highlights how Google is stepping up its challenge, offering both new features and more competitive pricing in a bid to sway thousands of enterprises that are yet to make the jump to the cloud.

With regard to its Compute Engine price cuts, Google said prices would fall by around 5 percent in the U.S., 4.9 percent in Europe, and by 8 percent in its Tokyo region.

In a detailed analysis of Google’s Committed Use Discounts versus AWS’s Reserve Instances, cloud computing management specialist RightScale Inc. found that Google’s discount program seems to provide substantially better savings than Amazon’s offering. “We used an anonymous real-world company’s cloud usage that represents a typical usage pattern combining both production and development use,” wrote Kim Weins, vice president of marketing at RightScale, about the analysis.

Weins explained that a one-year commitment to Google Compute Engine with Committed Use and Sustained Use Discounts works out around 28 percent cheaper than a similar discounted deal with AWS. Meanwhile, a three-year commitment under the same deal sees Google Compute Engine run around 35 percent cheaper than AWS’s rival service. In addition, Google users have more flexibility in the one-year scenario, as the company allows customers to make changes to their virtual machine types and regions, whereas AWS doesn’t offer this.

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Comparison of Google’s Commited Use Discounts vs AWS’ Reserved Instances. Source: Rightscale

RightScale lays out its full methodology and explains how Google’s offering is cheaper in this blog post.

Google’s decision to undercut Amazon will almost certainly provoke a response from the No. 1 public cloud provider, which has its own long history of slashing its prices to match those of its closest rivals. Microsoft Corp. is also likely to respond in the coming weeks in order to keep its Azure Cloud offering just as competitive.

Lower costs are always a good incentive, but one Google customer pointed out at Cloud Next that while price cuts often make headlines, they’re far from the being only factor that enterprises take into account.

When asked during a customer panel why he chose Google’s Cloud, Troy Toman, director of engineering at Planet Labs Inc., an Earth imaging company that builds and launches its own mini-satellites, said the most critical thing wasn’t so much the price as the business value it provides. He explained that when he was using AWS he had to write his own custom tools to figure out when and how many custom instances to use. With Google that wasn’t necessary, he said.

“Google fit what we needed better,” Toman said. “That pricing model and the way they’re doing business… for this particular thing it was a big factor for us. Google understands how to do that better.”

Image: 422737/Pixabay