AWS, Google Engage in 'Insane' Cloud Services Price War

NEWS ANALYSIS: Amazon Web Services and Google try to upstage each other with cloud service price cuts announced during conferences held one day after the other in San Francisco.

“Our prices are insane!” You remember that tagline if you spent any time in the New York region in the '70s and '80s and watched Crazy Eddie pitchman Jerry Carroll fast-talking his way through TV commercials that flogged the latest sales at the now-defunct electronics retailer.

If you are really lucky, you still have the Robert Crumb-designed logo T-shirt for Crazy Eddie, a retailer that blazed trails in electronics marketing, but often wallowed in disputes over questionable business practices.

In any case, this week in cloud services was reminiscent of the Crazy Eddie price cutting era. Although neither Google’s Urs Hölzle nor Amazon’s Andy Jassy will be confused with Carroll's high volume, on-air high jinks (their delivery is low key tending towards somnolent), price cuts of 20, 30, 40 and up to 80 percent were prime podium topics at the two companies' competing events.

In many ways, Amazon Web Services has had the cloud business mostly to itself over the past eight years, and 2013 and this early part of 2014 marks a great awakening among the competition that it is about time to get in the game for real.

Getting in the game now means racing to offer more and more services at lower and lower prices until what? Will the winner be the company that offers the most services to corporate customers for free? While free is doubtful, the services being discussed this week by Amazon, Google and their partners should convince competitors that the usually genteel shift of on-premise computing to cloud-based computing has taken on a louder and more aggressive tone accompanied by a shift into high gear.

Jassy, speaking at the Amazon Web Services conference in San Francisco on March 26, the day after Google held its own cloud computing confab in the city, characterized the company’s price cutting as simply an extension of its 41 previous cuts. You can see the details of the price cuts related to the introduction of Google Platform Live on the AWS blog. But the latest price cuts put the company broadly in line with Google (although exact comparisons are difficult) and continue the move to making in-house, on-premise data centers an increasingly expensive proposition by comparison.

Much of Jassy’s keynote focused on the value of the Amazon cloud to enterprise and government customers. This also continues AWS marketing shift away from promoting itself as the cloud service for startups (AirBnB) or enterprise development teams that need to quickly spin up capacity. Now AWS wants to be seen as the place for deployed systems requiring high levels of security, privacy and compliance with facilities that are wrapped in more enterprise features than on-premise facilities.

I noticed the trend at the RSA Security Conference where the public cloud vendors were making the argument that their resources, customer experience and certification procedures now add up to more secure, encrypted and compliant cloud environments than those available within the budgetary and personnel resources of on-premise systems.

The service announcements from the AWS event were limited and included an additional Department of Defense certification (important but not a huge deal) and the general availability of services announced last year including the WorkSpaces desktop virtualization product which now includes additional synchronization features.

For those tech marketers comparing the Google versus Amazon webcasts, Google won this round by offering the full day’s sessions on an integrated Twitter and Google Plus page. Cloud companies touting their global reach are usually much better at building global data centers around the world than in getting their marketing messages to span the globe.

Another significant news nugget coming out of the AWS keynote was Infor’s CEO Charles Phillips telling the audience that Infor’s ERP systems would henceforth reside on AWS. Infor has shifted about for a while trying to come up with a strategy to counter the in-house ERP presence of Oracle (Phillips’ old stomping grounds) and SAP.

By shifting its application platform to AWS and offering up a series of vertically focused ERP solutions, Infor has finally found a platform and a strategy that makes sense and I’m guessing Oracle and SAP would love to have available now.

The price cutting is fun to watch, and if you are a customer it will be fun to enjoy the benefits. But it will be the companies like Infor that are building real applications on top of the cloud platforms that will distinguish the winners in the cloud computing game. Let’s hope that some of those applications are just insane in their capabilities.

Eric Lundquist is a technology analyst at Ziff Brothers Investments, a private investment firm. Lundquist, who was editor-in-chief at eWEEK (previously PC WEEK) from 1996-2008 authored this article for eWEEK to share his thoughts on technology, products and services. No investment advice is offered in this article. All duties are disclaimed. Lundquist works separately for a private investment firm which may at any time invest in companies whose products are discussed in this article and no disclosure of securities transactions will be made.