Microsoft Joins Google, Amazon In Cloud Pricing War

by CXOtoday News Desk    Jun 25, 2014

microsoftcloud

Microsoft has announced a slash in its prices for online storage and opened more storage space on the company’s servers, in a bid to beat its rivals Google and Apple in the cloud space. “We want to give you enough storage space so you use OneDrive for everything,” said Angus Logan, OneDrive’s marketing director.

Users will now start with 15 gigabytes of storage — up from 7 gigabytes — by default, a quota that Microsoft says should be enough for 75 percent of users to meet their storage needs without needing to pay. Jumping to 100 gigabytes will now cost just $1.99 per month, while 200 gigabytes moves to a $3.99 monthly subscription from $7.49 and $11.49, respectively. In a blog post, Microsoft program manager Omar Shahine said that the new pricing structure will take effect next month. The company also said, all versions of Office 365 will come with 1 terabyte of OneDrive storage instead of the current 20 gigabytes, he said. Current contracts will be automatically changed over to the new offers. Experts believe Microsoft CEO Satya Nadella hopes to make the company more independent of the Windows operating system in light of shrinking PC sales.

Read: Nadella Assures A Big Push For Windows Azure

Microsoft’s recent aggressive pricing strategy is a serious step by the tech giant to remain competitive among rivals, where big cloud companies are realizing that the biggest differentiating factor to woo customer is Price and are constantly engaged in a race-to-the-bottom pricing war. Google announced a similar price cuts for its Google Drive service in March. It reduced computational services by as much as 32%, and storage prices up to 68%. Amazon.com would not like to be left behind and immediately announced a cut in prices on most of its cloud computing services in April that was in the range of 10-65%, Andrew Jassy, senior vice president of Amazon Web Services, told at a conference. Apple too has unveiled iCloud Drive — a new Dropbox-style cloud file locker — at its annual developers conference earlier this month and disclosed plans for its cost-effective iCloud.

Cloud evangelist Ajay Sawant states that when the cost per unit goes down, consumption goes up in any business and that’s what is happening with the cloud vendors as well. The lower the prices, happier are the customers. However, there is a sharp paradox. There’s more to Cloud than just price; this is about capturing customers and market share in the already crowded and increasingly competitive hosting and infrastructure services market. These vendors are also betting that volume will make up for lower prices in the long run, which fuels the pricing wars.

Read: CIOs grapple as cloud becomes mainstream

“CIOs too are realizing that the future is in the cloud and price isn’t the only thing they are relying on,” he says. Customers are also looking around for better performance, scalability and reliability, and will pick the cloud vendor whom they can trust. The competition also revolves around all these attributes, he believes.