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1/23/2014
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Amazon Cuts Cloud Storage Prices, Adds Server Instances

Amazon Web Services will cut Elastic Block Store prices by up to 50% and Simple Storage Service by an average of 14%, plus add two new M3 virtual servers.

Amazon will cut prices on its Elastic Block Store (EBS) by up to 50% and on its Simple Storage Service (S3) by an average of 14% beginning Feb. 1. It's also introducing two new M3 server instance types. Amazon Web Services's cloud evangelist Jeff Barr announced the price changes in a blog Tuesday.

EBS is where an Amazon customer saves a copy of its running system and its data. Without EBS, the customer's system and data would vanish without a trace once the virtual machine is shut down. EBS price cuts will vary by region, according to Barr. For example, using EBS service for a month in AWS's most popular datacenter, US-East, costs 10 cents per GB, but starting Feb. 1 it will be 5 cents per GB per month. Likewise, a million I/Os costs 10 cents, but beginning Feb. 1 it will be reduced to 5 cents.

S3 object storage will be reduced by 6 to 22%, a move that puts more pressure on Amazon's would-be competitors. Long-term object storage is one of the most competitive areas of cloud computing services. Established supplier Nirvanix abruptly exited the market in October, catching many of its customers by surprise. AWS's parent company, Amazon.com, is not yet profitable, but AWS keeps cutting prices and continues to gain share in the overall cloud service market.

The first TB of S3 storage currently costs 9.5 cents per month, but it will be lowered to 8.5 cents as of Feb. 1, an 11% reduction. The next 49 TBs will be reduced 6%, from 8 cents to 7.5 cents per month. The next 450 TBs will go down 14%, from 7 cents to 6 cents per month. From 500 to 1,000 TBs, the price will move from 6.5 cents to 5.5 cents a month, a reduction of 15%. From 1,000 to 5,000 TBs, the price will drop from 6 cents to 5.1 cents a month, another 15% decrease. S3 storage above 5,000 TBs will go from 5.5 cents to 4.3 cents per month, a 22% drop,

[In November, Amazon cut M3 prices. To learn more, see Amazon Cuts Some M3 Compute Instances 10%.]

Amazon keeps tinkering with its instance types, trying to expand those that are most popular. On Tuesday it announced an expansion to the M3 family, created in October 2012 and currently consisting of Extra Large and Double Extra Large servers. M3 will get two downsized additions. M3 Medium will be a virtual server assigned a single virtual CPU and 3.75 GB of RAM. The M3 Large instance will have two virtual CPUs and 7 GB of RAM. In comparison, M3 Extra Large has four virtual CPUs and 15 GBs of RAM, and Double Extra Large has eight virtual CPUs and 30 GBs of RAM.

All four members of the M3 family, used in big data, database, and other processing-intensive applications, are also assigned an allotment of solid-state disk: M3 Medium: 4 GB SSD; M3 Large: 32 GB; M3 Extra Large: 80 GB; M3 Double Extra Large: 160 GB.

M3 prices start at Medium: 11.3 cents an hour; Large: 22.5 cents; Extra Large: 45 cents; Double Extra Large: 90 cents an hour.

Amazon launched its EC2 cloud in 2006 with only the small M1 instance. It included a virtual CPU and 1.7 GB of RAM, and AWS charged 8 cents an hour for it. The price was reduced in late 2012 to 6.5 cents an hour. In November, it cut the Extra Large and Double Extra Large M3 instance prices by 10%.

Charles Babcock is an editor-at-large for InformationWeek, having joined the publication in 2003. He is the former editor-in-chief of Digital News, former software editor of Computerworld, and former technology editor of Interactive Week.

Private clouds are moving rapidly from concept to production. But some fears about expertise and integration still linger. Also in the Private Clouds Step Up issue of InformationWeek: The public cloud and the steam engine have more in common than you might think. (Free registration required.)

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Lorna Garey
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Lorna Garey,
User Rank: Author
1/24/2014 | 2:18:02 PM
Re: Is Amazon making life difficult for competitors?
I know that using cheap scale-out components, open-source software and cutting-edge data center design means Amazon can do pretty much everything more cheaply than typical enterprises. But they can't do it free! Where's the floor? And at what point are margins so thin that they start to hurt? Plus, they're getting IT used to these prices. How do you go up without churn?
cbabcock
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cbabcock,
User Rank: Strategist
1/23/2014 | 12:26:01 PM
Is Amazon making life difficult for competitors?
Amazon boasts that this is its 40th price cut since launching EC2 in 2006, a relatively meaningless statistic. The question is, cut prices where and how much? In this case, the answer is on the competitive storage front. AWS cut EBS block storage by 50%. Remember, Google dropped I/O charges and cut its Persistent Disk prices 60% on Dec. 3 in a bid to get into more serious contention for cloud custolmers. Persistent Disk is Google's equivalent to EBS.See  http://www.informationweek.com/cloud/infrastructure-as-a-service/google-compute-cloud-challenges-amazon/d/d-id/1112900.  So is Amazon, with this move, making life difficult for competitors. Or should it be more worried about investors?  
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