Has Microsoft Entered Google’s Storage Price War?

The cloud storage price war, initiated by Google (NASDAQ:GOOG) early last week, has taken on new combatants as the battle for market share in the emerging cloud market escalates.

While Amazon (NASDAQ:AMZN) is considered to be the best infrastructure-as-a-service provider, Google set out last week to upset the rankings. Amazon Web Services built its cloud service dominance on the platform’s innovative design, its easy-to-use architecture, and its use of economies of scale. But Google has chosen one key front from which to attack Amazon’s success: price. The storage wars took off last Monday, when the company lowered the cost of its Compute Engine storage services by 20 percent. Amazon respond similarly, dropping the price of its storage services by 24 to 27 percent. Google did not let Amazon’s price cuts pass without a response, and the company subsequently lowered prices by an additional 10 percent the following day.

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Now Microsoft (NASDAQ:MSFT) has dropped prices as well. Effective on December 12, the company’s Windows Azure Storage will cost as much as 28 percent less.

But Amazon is a tough opponent. As DigiTimes reported, its Web Services division has been able to attract an increasing number of clients due to its product differentiation. The correspondingly higher volume levels are then leveraged to drop prices, which causes Amazon to “work on the thinnest margin possible.”

Google and Microsoft are big enough companies that they can attempt to beat Amazon at its own game, but Hewlett-Packard (NYSE:HPQ) has found the challenge more difficult. However, despite the company’s troubled PC business, it has one advantage that its rivals do not — its history. According to Gigamon, executives at big companies are not comfortable with AWS. “Enterprises are looking for more traditional, full-service relationship and aren’t sure about Google and Amazon.” Interarbor Solutions analyst Dana Gardner told the publication. “HP could capitalize on that.”

To some degree, H-P has taken advantage of this with the launch of its OpenStack compute cloud this week, which will allow the company to transition its existing hardware, software and services customers to their own clouds.

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