Amazon Web Services Cuts Prices Again


Amazon Web Services has continued its price-cutting strategy, this time reducing fees for its relational database service (RDS).

On-demand prices have been cut by as much as 18 percent for MySQL and Oracle Bring Your Own License (BYOL) and up to 28 percent for SQL Server BYOL. The new rates became effective at the beginning of the month and vary by region.

Meanwhile, on June 11, a new rate structure was instituted for reserved instances of RDS in which prices were slashed by up to 27 percent for MySQL and Oracle BYOL. Although reserved instances are typically non-refundable, the company is making an exception for single-year reserved instances that were purchased in the last 30 days, as well as for 3-year reserved instances that were purchased within the last 90 days. Under the plan, customers can exchange their purchases for new ones and receive prorated refunds.

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AWS has repeatedly issued price reductions, often for its EC2 service, which are usually positioned as the result of increased efficiencies being passed down to the consumer. But some channel partners have found themselves wondering whether some of the increases might be more often motivated by strategic moves aimed at forcing competitors to lose profits after being forced to respond with price cuts of their own.

"I wonder if Amazon is intentionally trying to bleed its competitors a little bit," questioned Jonathan Sharp, vice president of marketing at Latisys, an Ashburn, Va.-based managed service provider. "I don't know for a fact that this is their strategy, but it is possible that they are trying to make it difficult to enter the public cloud market."

Sharp declined to speculate on how low prices for public cloud services might go, but characterized the situation as an apparent race to the bottom.

"I think it's a reflection of the intense competition that's out there right now," he added. "But the repeated price-cutting is not a good thing for companies like Rackspace. It's possible that Amazon is preemptively trying to make it a little bit harder for everybody else."

Other managed service providers see the price-cutting trend as a more positive development that could help provide MSPs with a bit more headroom when it comes to negotiating their own deals.

"I think the prices are going to get a lot more competitive, which I think can only help us as a managed service provider at the end of the day," said Kevin Kilpatrick, principal of Kilpatrick IT Solutions, LLC, of Merrimack, N.H. "Most of our clients do not seem to be expecting major price cuts from us, but they do expect some of the pricing to go down over time. But if our costs go down, then we can pass that along to our end-users as well."

PUBLISHED JUNE 12, 2013