Google slashes cloud computing prices in rivalry with Amazon

SAN FRANCISCO Wed Mar 26, 2014 1:43am IST

The Google logo is spelled out in heliostats (mirrors that track the sun and reflect the sunlight onto a central receiving point) during a tour of the Ivanpah Solar Electric Generating System in the Mojave Desert near the California-Nevada border February 13, 2014. REUTERS/Steve Marcus/Files

The Google logo is spelled out in heliostats (mirrors that track the sun and reflect the sunlight onto a central receiving point) during a tour of the Ivanpah Solar Electric Generating System in the Mojave Desert near the California-Nevada border February 13, 2014.

Credit: Reuters/Steve Marcus/Files

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SAN FRANCISCO (Reuters) - Google Inc (GOOG.O) slashed its cloud computing service prices on Tuesday, seeking to wrest customers from Amazon.com Inc (AMZN.O) and Microsoft Corp (MSFT.O) in the fast-growing market of renting computers and data storage to companies.

Price cuts range from 30 to 85 percent. Google's Cloud Storage will cost 2.6 cents per gigabyte, about 68 percent lower for most customers. Google's Compute Engine services will cost 32 percent less across all sizes, regions and classes.

"The cost of virtualized hardware should fall in line with the cost of the underlying real hardware," Google Senior Vice President Urs Holzle said in a post on Google's official developers blog on Tuesday in conjunction with a cloud event that the company hosted in San Francisco.

Holzle noted that hardware costs have improved by 20 to 30 percent during the past five years but that "public cloud prices fell at just 8 percent per year."

Cloud services are increasingly popular among tech startups and larger companies, which rely on computers owned and operated by the likes of Amazon and Google, the world's No. 1 Internet search engine, instead of buying the equipment themselves.

Amazon, one of the largest online retailers, was among the first companies to recognize the opportunity. Amazon Web Services provide the underlying infrastructure for key aspects of popular Web companies such as online movie streaming service Netflix Inc (NFLX.O) and social network Pinterest.

Amazon's Web Services will hold an event in San Francisco to discuss its business on Wednesday. Amazon did not immediately respond to a request for comment on whether it would respond to Google's price cuts.

Earlier this week Cisco Systems Inc (CSCO.O) announced plans to spend $1 billion over the next two years to build a new cloud services business.

(Reporting by Alexei Oreskovic; Editing by Richard Chang)

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