Amazon Rings in the New Year With Cloud Price Cuts

January 6, 2016, 4:46 PM UTC
Andy Jassy, Amazon SVP, at AWS Re:Invent 2015.
Amazon Web Services

Maybe it’s just a media thing, but it sure seems that the price-cutting frenzy that roiled the cloud computing market two and three years ago simmered down over the past year.

But the lull may be over. On Tuesday, Amazon (AMZN) Web Services kicked off 2016 with a set of price cuts to three of its bread-and-butter Elastic Compute Cloud (EC2) computing services.

The nitty-gritty details are here, but basically the public cloud giant is discounting three of its core Linux computing modules by about 5%. The reductions cover users running Amazon’s or Ubuntu versions of the Linux operating system. Customers who run Microsoft (MSFT) Windows, or two other flavors of Linux from SUSE or Red Hat (RHT), will see smaller discounts.

In AWS cloud-speak, an “instance” is the equivalent of a server processor. Amazon sells (or rents) computing capacity by the hour on an “on-demand” basis which requires no up-front payment. Customers can also lock in bigger per-hour discounts by committing to a one- or three-year contract for what Amazon calls a “reserved” instance.

But given the sheer number of instance types and price differences depending on what geographical region customers use, they had best read all the fine print. Things can get confusing pretty fast, which is probably one reason AWS on Wednesday unveiled enhancements to its Cost Explorer tracking tool that will let customers monitor the cost of their instances.

The improvements will let them break down the cost of running the instances themselves, as well as that of running Amazon’s Elastic Load Balancing (ELB) and Elastic Block Store (EBS) services. And they can now filter their usage both by instance type and the aforementioned regions.

In the past Microsoft executives have promised to meet or beat any price cuts by major public cloud competitors, so stay tuned. Google (GOOG) launched its latest set of cloud price cuts in May. AWS, Microsoft Azure, and Google Cloud Platform are viewed as the big three in public cloud computing.

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On Monday, Amazon also said that its WorkMail product, announced last year, is now available. WorkMail signifies Amazon’s push into higher level services used by not-necessarily-techie end users.

Products like WorkMail represent a significant shift for AWS, which built its massive business catering to the needs of tech-savvy developers who loved the fact that they could use petty cash or a personal credit card to “spin up” computing services and storage on which to build and test applications without a ton of corporate oversight.

But now, as Amazon woos top executives at big companies, it apparently sees the need to compete with legacy giants like Microsoft and IBM (IBM) in corporate email and other end-user services. Selling to a developer with minimal budget is one thing. Selling to the developer’s boss’s boss’s boss is quite another.

WATCH: How Amazon took over the cloud in this Fortune video:

For one thing, AWS used to announce cloud services as they became available. There was very little in the way of announcing a preview or beta version of software. But things are different now, as evidenced by the fact that WorkMail’s mail, calendaring, and scheduling became generally available a full year after they were announced. That’s straight out of the old Microsoft or IBM playbook.

MORE: On cloud price cuts.

So, as AWS adds perks to entice big companies, the IT providers that made billions selling to those same customers are desperate to show that they too can offer the sort of nuts-and-bolts cloud infrastructure (like servers and storage for rent), that Amazon does.

That struggle to adapt to cloud computing has dominated efforts (and acquisition strategies) by Microsoft, Oracle (ORCL), IBM, EMC (EMC), and others for the past several years.

This story was updated at 8:15 p.m. EST to reflect that the AWS 5% discount applies to users running Amazon or Ubuntu versions of Linux.

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