Google slashes prices to attract the enterprise to its Cloud Platform


They say the key to a man's heart is his stomach, and for me, that is probably true -- feel free to put fat jokes in the comments. But what is the key to a company's heart? Money. Yes, cost savings is an easy way to make a company take notice in your solution.

Today, Google is aiming to attract the enterprise to its Cloud Platform using this practice. You see, the search giant is dramatically slashing prices, and quite frankly, businesses should take notice.


"Compared to other public cloud providers, Google Cloud Platform is now 40 percent less expensive for many workloads. Starting today, we are reducing prices of all Google Compute Engine Instance types as well as introducing a new class of preemptible virtual machines that delivers short-term capacity for a very low, fixed cost. When combined with our automatic discounts, per-minute billing, no penalties for changing machine types, and no need to enter into long-term fixed-price commitments, it’s easy to see why we’re leading the industry in price/performance", says Urs Hölzle, Senior Vice President, Technical Infrastructure, Google.

Hölzle further explains, "for some applications we can do even better: if your workload is flexible, our new Preemptible VMs will run your short-duration batch jobs 70 percent cheaper than regular VMs. Preemptible VMs are identical to regular VMs, except availability is subject to system supply and demand. Since we run Preemptible VMs on resources that would otherwise be idle, we can offer them at substantially reduced costs. Customers such as Descartes Labs have already found them to be a great option for workloads like Hadoop MapReduce, visual effects rendering, financial analytics, and other computationally expensive workloads".


Wow. 70 percent cheaper? 40 percent cheaper? You cannot argue with those savings. Of course, businesses  are correct to be dubious that these low prices are here to stay. Once you make your clients "sticky" to your services, it can be tempting to increase prices, knowing it will be difficult for them to leave.

Google vows not to do this. In fact, the company promises to model its pricing after Moore's Law.

Since Cloud computing became widely available, public Cloud prices have fallen at 6-8 percent annually. While this may seem significant in the abstract, when you consider the larger trends in compute pricing over the last several decades, we don’t think 6 percent-8 percent comes close to reflecting the true economics of computing. Over the same period of time, the underlying hardware has fallen at 20-30 percent annually -- following Moore's Law. In order for Public Cloud to be a true substitute for the legacy premises-based model, we think pricing has to more accurately reflect these savings. As such, Google introduced a pricing model that will more closely follow the trends in Moore’s Law.

In other words, not only should pricing not increase, but continually decrease over time. Whether this model is sustainable in the long term remains to be seen.

For the time being, however, coupling Google's dependability with reduced pricing sounds like a guaranteed win. How can you go wrong?

Photo Credit: Zdorov Kirill Vladimirovich/Shutterstock

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