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Microsoft Beats Amazon By A Whisker In Cloud Pricing

Microsoft has disclosed pricing on its forthcoming Windows Azure services, and in one small but significant way, Microsoft has undercut rival Amazon on pay-per-use fees. Amazon charges 12.5 cents per hour for a bare bones Windows Server instance; Microsoft's list price is 12 cents.

Microsoft officials had previously indicated that Windows Azure pricing would be competitive, but the price differential may be more symbolic than material. At their published rates, if you ran a Window server in the cloud every hour of the day for an entire year, you'd save a mere $43.80 going with Microsoft. Indeed, if penny pinching is important, Amazon Web Services actually has a cheaper alternative, though it's not Windows. Amazon charges 10 cents per hour for "small" virtualized Linux and Unix servers.

Beyond that, cost comparisons between Amazon's market leading Elastic Compute Cloud (EC2) and Microsoft's yet-to-be-delivered Windows Azure services (they're due in November) are hard to make. Amazon provides a handful of EC2 options, ranging from small server instances with one CPU core and 1.7 GB of memory to high-CPU instances with eight virtual cores and 7 GB of memory. In addition, both Microsoft and Amazon charge additional fees for other resources, such as storage and bandwidth, based on consumption. What's more, Amazon offers a significant discount for customers willing to commit in advance to "reserved instances," which begin at 3 cents per hour for Linux/Unix.

In general, Amazon has more granular pricing than Microsoft, including details on the amount of memory in an Amazon Machine Image, the number of virtualized cores, associated storage, and whether you're getting a 32-bit or 64-bit environment. You can check out Amazon's EC2 pricing here. Amazon also provides a calculator that crunches numbers when several of its services are used together.

Following are Microsoft's just-released prices for Azure services.

Windows Azure
Computing: $0.12 per hour
Storage: $0.15 per gigabyte stored
Storage transaction: $0.10 per 10K
Bandwidth: $0.10 in/$0.15 out per gigabyte

SQL Azure
Web Edition Database, includes up to 1 GB relational database: $9.99
Business Edition Database, includes up to 10 GB relational database: $99.99
Bandwidth (both): $0.10 in/$0.15 out per gigabyte

.NET Services
Messages: $0.15 per 100K message operations, including Service Bus messages and Access Control tokens
Bandwidth: $0.10 in/$0.15 out per gigabyte

Microsoft says customers can realize TCO savings up to 75% over three years with Azure services compared to on-premises systems. In addition to pay-as-you-go pricing, Microsoft will make Windows Azure services available via subscription as part of its MSDN Premium offering. And beginning in the second half of next year, corporations will be able to incorporate Windows Azure fees into their enterprise license agreements, though details on just how that will work haven't yet been released.

What if something goes wrong? The SLA terms covering Windows Azure and Amazon's EC2 are the same—a guarantee of 99.95% availability for computing resources and 99.9% for storage.