Microsoft Azure Starts Cloud Price War Against Amazon Web Services

Microsoft has finally delivered Infrastructure-as-a-Service (IaaS) for its Windows Azure cloud product, and promised it will always beat the price of commodity servers and storage on the market leader, Amazon Web Services (AWS).

The long-awaited IaaS feature, promised last June, extends Windows Azure beyond its role as Windows-in-the-cloud, and makes it a direct rival to AWS, but the company is positioning its price-match offer as a lure to get customers onto the more lucrative and powerful Platform-as-a-Service (PaaS) offerings. However, the memory of Azure’s global failure in February is still fresh, giving the service an uphill struggle.

Microsoft Azure – Cheaper Than Amazon?

“PaaS is for new applications, but IaaS is now there as well so users can move existing applications into the cloud,” said Michael Newberry, Microsoft’s Azure lead for the UK.

When TechWeekEurope spoke to Newberry last year, he wasn’t positioning Azure’s nascent IaaS offering as an AWS competitor. And this announcement is not exactly an outright declaration of war, as Microsoft does also partner with Amazon.

“AWS has been setting a price point in the market,” he told us. “This often comes up in conversations with customers. As the price point moves, they can take it for granted that we will commit to matching that price point.”

Newberry would not predict how much business Microsoft will steal from Amazon through this price promise.

In fact, the price comparison is incidental. Newberry is more focused on getting the new apps in, while the legacy apps are not going away, with one customer moving the first Cobol application onto Azure recently, he reported.

Low cost commodity IaaS servers could be seen as a “loss leader” to encourage users to bring the more lucrative PaaS business to Microsoft. Many users are putting old applications on IaaS  servers, while building new front ends on PaaS. The benefits this gives include integration with Microsoft’s Active Directory Services, and support of the full stack if it uses Windows and a Microsoft application.

The tech titan does have to convince users on reliability too, after an embarrassing couple of failures with Microsoft Azure. The service went down in February, because of a failure in the renewal and distribution of SSL security certificates, almost exactly a year after an even more humiliating collapse. In February 2012, Azure failed because it had not been programmed to accommodate the extra day of the leap year.

In a bid to reassure potential users, Newberry pointed to the root cause analysis Microsoft published on the February failure, and the promises to improve: “On  the journey we are going through there will be hiccups. “People understand we are getting better and better, and these will be fewer and fewer.”

The Azure pricing will be uniform worldwide – and the IaaS service will be delivered from eight data centres, four  in the US, two in Europe and two in Asia.

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