Microsoft sharpens blade, slashes high-mem cloud prices in Amazon duel

Microsoft has opened up yet another front in its ongoing cloud price war with Amazon by cutting prices of its high-memory servers by as much as 22 percent.

The price drop was announced on Friday and sees Microsoft lower the cost of its 2-core, 14GB RAM A5 server instance to $0.32 per hour for Linux, along with similar price cuts to its beefier A6 and A7 instances.

This pricing nips Amazon's equivalent $0.410 per hour price for its "Extra Large High-Memory On-Demand" Linux.

Though cloud computing isn't nearly as cheap as running on-premises IT with high utilization, it does do away with a ton of management headaches and – thanks to strong competition among Amazon, Microsoft and Google – is one of the few industries in the world besides clothing where year after year costs fall.

Because Microsoft and Amazon have slightly different sizings (Microsoft's A5 comes with 14GB of memory versus Amazon's 17.1GB) a closer analysis reveals the true price war: for Linux instances, Amazon is charging $0.0239 per hour per gigabyte of RAM, compared with Microsoft's $0.022.

The difference may seem small but for companies buying scads and scads of RAM on an on-demand basis, it will have a large effect.

Things are roughly the same when running Windows on Microsoft's Azure cloud, and here Microsoft's natural advantage comes into play with the A5 instance costing $0.40 per hour, versus Amazon's $0.510, which translates to a $0.0298-per-hour-gigabyte-of-RAM price for Amazon versus $0.028 for Microsoft.

"These price reductions will take effect in November, and will enable you to run applications that demand larger memory (such as SharePoint, Databases, in-memory analytics, etc) even more cost effectively," Microsoft's corporate vice president Scott Guthrie said in a blog post that announced the pricing change.

Amazon is still a better deal for reserved instances and spot instances, but given Microsoft's plans to introduce further price cuts for Azure users with Enterprise Agreements come November, this could change as well.

Given Amazon's tendency to follow the price cuts of Google or Microsoft with reprisal slashings of its own, we expect a new announcement in the next couple of weeks.

Besides undercutting Amazon on high-memory server prices, Microsoft has also made the general availability image of Windows Server 2012 R2 available on Windows Azure, alongside its on-premises release. The platform "deploys and runs 30 per cent faster than previous versions," Guthrie said.

Redmond also pushed on with its "hybrid cloud" fantasy of admins running an identical Azure environment on-premises as they do in the cloud by releasing the Windows Azure Pack, which lets techies spin up an Azure-like management portal for their on-site cloud.

With this round of releases Microsoft has proven that it's willing to battle Amazon on price, and it's not shy of putting pressure on Bezos & Co via canny pricing and feature-additions to its core software expertise. The nice thing about this particular IT war is that the various combatants are fighting with price cuts, rather than FUD. ®