Cloud Price War Resumes With Google Cuts
Another week, another round of cloud computing price cuts.
The latest comes from Google, which announced today across-the-board 10 percent reductions in all Google Compute Engine instance types. The cuts include all regions and are effective immediately, Google said.
Google said the price cuts reflect its philosophy that cloud computing, "the core of any cloud workload," should be priced in accordance with Moore's Law, or the doubling of processing speed and power roughly every two years.
Perhaps, but Google's latest move is another in a long series of price cuts by leading cloud providers Amazon Web Services, Microsoft Azure and Google. Smaller providers increasingly squeezed by the big boys complain that the price cuts reflect the actual cost of delivering cloud computing and storage services—meaning the market leaders are really playing catch up.
Along with the exigencies of Moore's Law, Urs Hölzle, Google's senior vice president for technical infrastructure, added in a blog post, "These cuts are a result of increased efficiency in our data centers as well as falling hardware costs, allowing us to pass on lower prices to our customers."
In the U.S. market, the 10 percent price cut works out to $0.063 from $0.07 for standard Google Compute Engine instances. High memory instances in the U.S. drop from $0.082 to $0.074 while high CPU instances in the domestic market will decline from $0.044 to $0.040, Google announced.
The latest cloud price reductions from Google are consistent with what Hölzle has been saying since the search giant's Cloud Platform Alive event in March, namely: Cloud “pricing is still way too complex. It may seem cheap by comparison with your on-premise alternatives, but there is still a lot of room for it to go down."
The issue for app builders and other heavy users of cloud services is, "Should you use on-demand instances that are flexible or cheaper reserved instances? And should you pre-pay and if so how much and for how long are you going to use them? How do you optimize your cost versus performance?” Hölzle stressed last spring.
Those issues were raised as Google, AWS, and Microsoft Azure launched an earlier round of price cuts. A day after Google lowered prices, AWS responded by cutting the price tag for Amazon EC2, Amazon S3 storage, its relational database service and Elastic MapReduce. The price war has taken a toll on AWS revenues even as cloud capacity sold to AWS customers grows.
Microsoft also moved earlier this year to cut Azure storage prices as it seeks to go head-to-head with AWS.
Hence, it's a good bet that Google's across-the-board price cuts for Compute Engine will reignite the cloud price wars, forcing AWS and Microsoft to respond in kind.
