Amazon Web Services announced Tuesday an 11% reduction in the cost of storage for the first terabyte on its S3 storage service, with savings that increase to 12% for 50 TBs and 13.5% for 500 TBs.

"With this price change, all Amazon S3 standard storage customers will see a significant reduction in their storage costs," wrote Jeff Barr, senior AWS evangelist in a blog yesterday.

The first TB of data was previously priced at $0.14 per GB a month; with the price reduction, it's $0.125 a GB per month. The next 49 TBs were previously priced at $0.125 a GB /month; it's now $0.11 a GB/month. The next 450 TBs were priced at $0.11; they're now $0.095. The next 500 TBs were $0.095 and are now $0.09.

"We continue to innovate on your behalf to drive down storage costs and pass along the resultant savings to you at every possible opportunity," Barr wrote.

[ Learn how an on-premises Amazon virtual appliance can send recoverable snapshots of data to S3 in the AWS cloud? See Amazon Unveils Cloud Storage Gateway. ]

Some critics have thought the price of storage, in the form of external drives, was dropping faster for on-premises users than was storage in the cloud and have said so. In spite of that, the number of objects stored in Amazon's S3 service increased from 262 billion at the end of 2010 to 762 billion by the end of 2011.

The prices changes are effective Feb. 1 in the United States. Storage already contracted for at the higher rates will become available as of that date at the lower rates, Barr said in the blog.

Cloud storage is readily available from numerous suppliers and has the advantage of expanding, as the customer needs more. It is also automatically backed up in S3, and gives customers a remote location for a copy of their data outside their own data center, aiding recovery in the event of data center loss in a disaster.

But the cost of cloud storage is still debated. In addition to the charges listed as going down by Amazon, there are data transfer and command usage charges. Customer use of Put, Copy, List, or Post commands lead to $0.01 charges per 1,000 commands. It's free to transfer data into S3 but transferring more than one GB out leads to charges of $0.12 per GB for the first 10 TBs; $0.09 per GB for the next 40 TBs; and $0.07 per GB for the next 100 TBs. The free admission for data, but charges to extract, are often viewed as a mechanism to keep customers using cloud storage once they've been initiated into it.

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