Amazon Slashes Cloud Prices Again

Amazon Web Services (AWS) has announced that it is reducing the prices of many of its Amazon EC2, Amazon Relational Database Service (RDS) and Elasticache cloud services.

The company says that this is the 18^th time that it has lowered its pricing in the last six years and has reiterated its philosophy of passing on savings to its customers.

In this instance

The EC2 price reduction varies according to instance type and region. EC2 services are available either on-demand or on a pay-as-you-go system known as reserved instances, where you can effectively lease the server for a period of time and save money if you have a predictable workload.

Reserved instance prices are dropping by as much as 37 percent and on-demand instance prices by as much as 10 percent. According to a blog post, Amazon says the cost of running a small website on an m1 small instance in 2006 was $876 (£556) per year, but now with a high utilisation reserved instance, it is possible to run the same website for just $250 (£159) per year, less than one third of the cost and effectively three cents an hour.

The company will be lowering both the on-demand and reserved instance prices for standard, high-memory and high-CPU services.

Amazon says that it is also keen to dispel the theory that the cost benefits of EC2 diminish as scale increases by offering discounts for larger businesses. Companies which hold more than $250,000 (£159,000) worth of reserved instance volume tiers will receive a ten percent discount on any additional reserved instances purchased, with a twenty percent reduction afforded to those who own more than $2 million (£1.27m) and special discounts for those who have more than $5 million (£3.8m).

Pass it on

The prices of Amazon Relational Database Serivce (RDS) will also increase by up to 42 percent and Amazon Elasitcache by up to 10 percent.

“As we continue to find ways to lower our own cost structure, we will continue to pass these savings back to our customers in the form of lower prices,” commented Jeff Barr of AWS. “Some companies work hard to lower their costs so they can pocket more margin. That’s a strategy that a lot of the traditional technology companies have employed for years, and it’s a reasonable business model.  It’s just not ours.”

“We want customers of all sizes, from start-ups to enterprises to government agencies, to be able to use AWS to lower their technology infrastructure costs and focus their scarce engineering resources on work that actually differentiates their businesses and moves their missions forward.”

Matt Wood of AWS told TechWeekEurope that “This is the eighteenth cut we have made – without any competitive pressure”. however, it comes at a time when one of its main competitors, Windows Azure is dealing with the fall out of a Leap Year glitch that caused a service outage last week.

The outage was unlikely to inspire confidence in IT managers still recovering from a service outage that affected AWS itself last April.