Microsoft Drops Azure Pricing – New Price War?

As a means to directly compete with Amazon, Microsoft has announced that it will drop pricing on storage services in retaliation to Amazon making an announcement that they planned on dropping prices. This could be the first shots fired in a public cloud pricing war. Microsoft has vowed to stay competitive regardless of what Amazon charges for their services. Could this signal a race for the bottom as far as public computing pricing is concerned?

2014 has been heralded as the year of the hybrid and private clouds. Since so much focus is going on private infrastructure, wouldn’t it make sense to make public infrastructure more competitive in efforts to drive away the focus? Lower pricing could also mean that hybrid solutions become more feasible. When organizations experiment with hybrid cloud setups, they tend to become more comfortable using cloud computing on the public side. This will increase demand and continue to lower prices.
Microsoft wrote on their Azure Blog about the pricing changes, “Here are the details… We are matching AWS’ lowest prices (US East Region) for S3 and EBS by reducing prices by up to 20% and making the lower prices available in all regions worldwide. For Locally Redundant Disks/Page Blobs Storage we are reducing prices by up to 28%. We are also reducing the price of Azure Storage transactions by 50%.”
Microsoft also boasted research that shows “Windows Azure Infrastructure Services was the highest performing provider and on average has 3X better price for performance than Amazon EC2.”
This war between Microsoft and Amazon will continue for the foreseeable future. As both platforms continue to mature, each platform will focus on improving public cloud technology. You can expect to see a multitude of additional functionality added that will help each platform differentiate itself while prices continue to drop.