AWS Delivers More Price Cuts To Ring In 2016

Amazon Web Services delivered a new year's gift to partners on Tuesday -- its 51st price reduction.

The Seattle-based cloud leader reduced by 5 percent the cost of three types of EC2 instances -- C4, M4 and R3 -- running standard Linux in regions across the U.S., Europe and Asia. The new pricing applies to On-Demand, Reserved and Dedicated host procurement models.

Smaller price reductions will be applied to the same three instance types in the same regions that are running Windows and two premium Linux distributions: SUSE Linux Enterprise Server and Red Hat Enterprise Linux, blogged Jeff Barr, the chief evangelist for AWS, without specifying the extent of savings those customers will realize.

[Related: Is Google Reigniting The Cloud Price Wars?]

AWS also extended the 5 percent R3 price cut alone to instances hosted in its isolated region for government clients and in its Brazilian data center serving South America, according to Barr.

Price changes to the On-Demand (pay as you go) and Dedicated host (single tenant servers) procurement models are retroactive to the beginning of the month, Barr said. The new price sheet for Reserved instances -- those that offer large discounts for long-term commitments -- went into effect concurrent with Tuesday's announcement.

Barr told customers that during the month, their billing estimates may not reflect the new pricing schedule, but those lower prices will show up in their monthly statements.

"The continued price cuts present both a challenge and an opportunity to AWS partners," said Jamie Begin, CEO of RightBrain Networks, an AWS partner based in Ann Arbor, Mich.

The challenge for VARs and system integrators is that their profits on resale margins go down with every drop, he told CRN.

But that's just "a clear indication that their business model needs to be rethought," Begin said, as cloud computing rapidly pushes the industry toward a more service-focused model.

The good news is that it becomes easier for customers to justify the cost of AWS migration projects when the platform has a track record of becoming progressively less expensive, he said.

Michael Campbell, vice president of sales for Relus Technologies, an AWS partner based in Atlanta, said Amazon Web Service's 51st price reduction demonstrates the cloud leader remains fearless when fighting the cloud wars.

"When was the last time Cisco, EMC or IBM, let alone any of the other cloud providers, could say they have dropped prices again?" Campbell asked.

"AWS continues to focus on the customer, and their relentless pursuit of automation and efficiency will keep benefiting our AWS users," Campbell said. "It's a lot more fun calling a customer and telling them how we can help them cut their AWS bills rather than have to explain an unwanted price increase."

Campbell added he believes the 52nd price reduction "is right around the corner."

Jeff Aden, executive vice president of 2ndWatch, a partner based in Seattle, told CRN, "Overall this is another great signal for cloud adoption. Increased demand for cloud and lower prices adds up to an ideal market for everyone to win."

PUBLISHED JAN. 5, 2015