Microsoft Hits Back at Amazon with Azure Price Cuts

The price war between Microsoft and Amazon continued Monday, when Microsoft responded to Amazon's recent round of cloud compute and storage price cuts by slashing the rates for its Windows Azure -- soon to be Microsoft Azure -- cloud service.

Microsoft is lowering the price of its Azure compute services by 35 percent and its storage service by 65 percent, the company announced.

"We recognize that economics are a primary driver for some customers adopting cloud, and stand by our commitment to match prices and be best-in-class on price performance," said Steven Martin, general manager of Microsoft Azure business and operations, in a blog post.

Microsoft's price cuts come on the heels of last week's launch of Azure in China.

In addition to cutting prices, Microsoft is adding new tiers of service to Azure. On the compute side, a new tier of instances called Basic consist of similar virtual machine configurations as the current Standard tier, but won't include the load balancing or auto-scaling offered in the Standard package. The existing Standard tier will now consist of a range of instances from "extra small" to "extra large." Those instances will cost as much as 27 percent less than their current instances.

Martin noted that some workloads, including single instances and those using their own load balancers, don't require the Azure load-balancer. Also, batch processing, dev and test apps are better suited to the Basic tier, which will be comparable to Amazon Web Services (AWS)-equivalent instances, Martin said. Basic instances will be available starting April 3.

Pricing for Azure's memory-intensive instances will be cut by up to 35 percent for Linux instances and 27 percent for Windows Server instances. Microsoft said it will also offer the Basic tier for memory-intensive instances in the coming months.

On the storage front, Microsoft is cutting the price of its Block Blobs by 65 percent, and by 44 percent for Geo Redundant Storage (GRS). Microsoft is also adding a new redundancy tier for Block Blob storage called Zone Redundant Storage (ZRS).

With the new ZRS tier, Microsoft will offer redundancy that stores the equivalent of three copies of a customer's data across multiple locations. GRS, by comparison, will let customers store their data in two regions that are dispersed by hundreds of miles and stores the equivalent of three copies per region. This new middle tier, which will be available in the next few months, costs 37 percent less than GRS.

Though Microsoft has committed to matching price cuts by Amazon, the company faced a two-pronged attack last week from Amazon and Google, which not only slashed prices for the first time but finally started offering Windows Server support. While Microsoft has its eyes on Amazon, it needs to look over its shoulder as Google steps up its focus on enterprise cloud computing beyond Google Apps.

One area in which both Amazon and Google have a leg up on Microsoft is their respective Desktop as a Service (DaaS) offerings. As noted last week, Amazon's WorkSpaces DaaS offering, which it announced back in November at its re:Invent customer and partner conference, became generally available. And as reported in February, Google and VMware are working together to offer Chromebooks via the new VMware Horizon DaaS service.

It remains to be seen how big the market is for DaaS and whether Microsoft's entrée is imminent.

Posted by Jeffrey Schwartz on 04/01/2014 at 1:02 PM