Google slashes cloud computing prices in rivalry with Amazon

SAN FRANCISCO Tue Mar 25, 2014 3:49pm EDT

An employee sits behind a reception desk during a media tour in the Google data centre in Changhua Coastal Industrial Park, central Taiwan, December 11, 2013. REUTERS/Pichi Chuang

An employee sits behind a reception desk during a media tour in the Google data centre in Changhua Coastal Industrial Park, central Taiwan, December 11, 2013.

Credit: Reuters/Pichi Chuang

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SAN FRANCISCO (Reuters) - Google Inc slashed its cloud computing service prices on Tuesday, seeking to wrest customers from Amazon.com Inc and Microsoft Corp in the fast-growing market of renting computers and data storage to companies.

Price cuts range from 30 to 85 percent. Google's Cloud Storage will cost 2.6 cents per gigabyte, about 68 percent lower for most customers. Google's Compute Engine services will cost 32 percent less across all sizes, regions and classes.

"The cost of virtualized hardware should fall in line with the cost of the underlying real hardware," Google Senior Vice President Urs Holzle said in a post on Google's official developers blog on Tuesday in conjunction with a cloud event that the company hosted in San Francisco.

Holzle noted that hardware costs have improved by 20 to 30 percent during the past five years but that "public cloud prices fell at just 8 percent per year."

Cloud services are increasingly popular among tech startups and larger companies, which rely on computers owned and operated by the likes of Amazon and Google, the world's No. 1 Internet search engine, instead of buying the equipment themselves.

Amazon, one of the largest online retailers, was among the first companies to recognize the opportunity. Amazon Web Services provide the underlying infrastructure for key aspects of popular Web companies such as online movie streaming service Netflix Inc and social network Pinterest.

Amazon's Web Services will hold an event in San Francisco to discuss its business on Wednesday. Amazon did not immediately respond to a request for comment on whether it would respond to Google's price cuts.

Earlier this week Cisco Systems Inc announced plans to spend $1 billion over the next two years to build a new cloud services business.

(Reporting by Alexei Oreskovic; Editing by Richard Chang)

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Comments (2)
AlkalineState wrote:
Clouds are a rip-off. That’s why the ‘cloud providers’ are pushing them so hard. When you compare it to data storage space you could just own outright, cloud storage rental amounts to about a 10,000% tax on data storage over time. That’s why they push it.

Mar 25, 2014 4:25pm EDT  --  Report as abuse
AlkalineState wrote:
So the new ‘low’ price is 2.6 cents per gigabyte per month. That’s better, but that still costs far more than simply owning and controlling your own storage. It is $26 per terabyte per month. Year one on a stored terabyte is $26 X 12 = $312. You can buy a seagate 1 TB for $70. Take that out to 5 years and you are looking at $70 to own, $1,560 to rent cloud.

Mar 25, 2014 5:03pm EDT  --  Report as abuse
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