Can Google Force AWS Out of the Cloud Business


The cloud price wars continue between Amazon, Google and Microsoft. Recently, Google dropped their prices by a whopping 10% from $.07/hour to $.063/hour for the n1-standard-1 US configuration. Amazon and Microsoft will follow suit. In two weeks, one of the three are likely to drop their prices from $.063/hour to $.06/hour. Thereafter, a month later, someone else will drop their price from $.06/hour to $.058/hour. The million dollar question is if prices drop by 10% of a penny, week after week, month after month, are these prices wars? The answer is no. This is simply nickel and diming shenanigans. Google, Amazon and Microsoft are fierce competitors. Not only are stealing each others customers, but also recruiting each others employees.

Does Google really want to hurt Amazon badly, enough to drive them out of the cloud compute business forever? The magic formula is simple. Next time, instead of dropping the price from $.06/hour to $.058/hour, drop the price to $.010/hour. What kind of price drop is that? Six fold. But why stop there? Might as well offer 1 penny/GB for storage, and 1 penny/GB for CDN services. In one fell swoop, Google would lay the cards on the table. Would Amazon call the bluff? Probably not. What would probably happen is that Amazon would get out of the cloud business, and back into the book business. This is a real price war, and it would certainly be fun to watch.

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