Microsoft has made significant pricing cuts for Azure virtual machines and blob storage, in a move that suggests 2017 will see competition heat back up among cloud providers on the basis of cost and not just functionality. Redmond announced the cuts in a blog post:
We believe in providing a comprehensive cloud platform that not only enables customers to innovate rapidly, but to also do so at the best possible prices. To that end, today we are happy to announce significant price reductions on several Azure Virtual Machine families and Storage types. We hope this will further lower the barrier to entry for our customers and accelerate cloud transformation.
We have reduced prices on Compute optimized instances – F Series, General purpose instances – A1 Basic by up to 24% and 61% respectively.
We will also be announcing price reductions specifically for our D-series General-purpose instances in the near future.
A1 Basic Azure VMs are on the low end size-wise and meant for development and testing purposes. F Series VMs are optimized for compute-intensive workloads such as gaming, analytics and batch processing. D-series VMs are ideal for most production applications.
Meanwhile, pricing on Azure Hot Block Blob Storage and Cool Block Blog Storage is getting dropped by up to 31 and 38 percent respectively, Microsoft says. You have to have a Blob Storage account to get the savings.
The timing of the cuts probably comes down to recent economies of scale Microsoft gained through global Azure data center expansion. That being said, pricing varies from region to region, and enterprises with global usage of Azure will still need to get out the magnifying glass in order to pinpoint the most advantageous footprint (putting aside data-sovereignty requirements).
Analysis: Price Isn't Everything and Portability Is Key
The markey will see many more price reductions as economies of scale come to fruition and the three leaders—Amazon Web Services, Microsoft and IBM—battle it out, says Constellation Research VP and principal analyst Holger Mueller. Oracle will also be aggressive with price cuts as it tries to grow market share and catch up, he adds.
However, "CIOs and CTOs need to remember that price isn't everything," Mueller adds. "Performance and data residency matter, too. Negotiate matching rates with two to three other competitors before you lock in. Ultimately it is about building next-generation apps that are portable across clouds."
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