Cloud price wars escalate as Microsoft slashes compute rates


Two weeks into the new year, the public cloud is already witnessing its first major skirmish. Microsoft Corp. this week made a significant price cut to one the most popular virtual machine types on its infrastructure-as-a-service platform in response to a series of similar markdowns that archnemesis Amazon Inc. announced over the preceding days.

The first shot was fired after the retail-turned-cloud-giant slashed five percent off the rates on its general-purpose M4 instances, the C4 variation for processor-intensive workloads like graphics rendering and the memory-packed R3 configuration. Before users even had a chance to calculate how much they stand to save, Amazon followed up the move with the introduction of a new purchasing option that will further reduce the cloud bill by up to 10 percent for deployments that only run during scheduled time intervals.

The changes that Microsoft is making to the pricing of its D4 virtual machines, which most directly compete with its rival’s C3 instances, in response will see some users end up paying as much as 17 percent less than they do now after the new billing structure rolls out next month. The discount for deployments running Windows is set to peak at a slightly lower 13 percent, but the difference probably won’t surprise customers too much given that Amazon’s price adjustments tend to follow the same pattern when it comes to instances running Redmond’s operating system.

Microsoft’s undercutting campaign has been even more predictable since the head of its cloud business committed to matching the company’s prices on core compute, storage and network resources in 2013. As a result, it’s safe to assume that the software giant won’t take any additional shots at its rival for the foreseeable future, but that doesn’t mean this latest round of hostilities is necessarily over. With its two biggest competitors announcing major price cuts just days apart, Google Inc. may rightly feel pressure to respond.

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