Cloud price wars are back on

Amazon responds to Google’s flexible cloud pricing announcement

At the Google NEXT cloud conference last week the company announced new Committed Use Discounts (CUDs) in which customers receive a reduced rate on virtual machine rentals in exchange for signing a one or three year contract.

+MORE AT NETWORK WORLD: 10 Ways Google improved its cloud at its big NEXT conference +

It’s not a completely novel concept because Microsoft offers enterprise agreements and Amazon Web Services has Reserved Instances, which are a similar concept.

One of the main arguments Google made was that its CUDs are more flexible than competitors though. Users don’t have to commit to a specific virtual machine instance type for three years, the company said. Instead, they just estimate how much aggregate virtual compute and/or memory they will use over the life of the contract. CUDs are in beta in Google’s cloud, you can read more about them here.

Less than a week after Google announced CUDs, Amazon responded. Today, AWS announced “Instance Size Flexibility” for its Reserved Instances. Now, customers are able to change the virtual machine type they’ve reserved.

To explain further: AWS has classes of VM types: T2 general purpose (comes in seven sizes); C4 Compute optimized instances (comes in five sizes); X1 memory optimized (comes in two sizes), and so on. With the new flexibility option, customers can change from one size of VM to another within the same family. For even more flexibility, customers can register for Convertible Reserved Instances, which give even greater freedom to switch VM types, with the tradeoff being not as steep of a discount.

The bigger point here is that AWS felt a need to seemingly respond to Google. It’s reminiscent of the cloud price wars that seemed to dominate the industry just a few years ago and the ‘race to the bottom’ of cloud pricing. At the time, one vendor would lower prices and within hours or days a competitor would do the same. We’ve perhaps entered the next phase of this with vendors attempting to position their clouds as the most flexible when it comes to pricing. Welcome to the cloud flexibility wars.

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