Google Cuts Prices on Cloud Services, Challenging Amazon

Google Inc. (GOOG) cut prices on some Internet-based services for businesses by 30 percent or more, stepping up a challenge to Amazon.com Inc. and Microsoft Corp. in cloud computing.

The services let customers use computer power or storage space on machines in Google’s own data centers. The company is reducing the price of its key computing-capacity product by 32 percent, Senior Vice President Urs Holzle said today at an event in San Francisco. Google also is lowering the price of storage by about 68 percent for most users, and by 85 percent for its BigQuery data-analysis service.

The biggest Web-search company is aiming to woo customers by simplifying the process for buying cloud services, which are attracting startups and established companies looking to cut hardware costs and increase remote or mobile access for workers on the go. Google is competing with Amazon, Microsoft (MSFT) and Rackspace Hosting Inc., along with newer providers, in a market that Gartner Inc. projected would reach $131 billion last year.

“We have made this all more affordable than it’s ever been before,” Holzle said. “The price of virtualized hardware should follow the same trends as real hardware.”

The Mountain View, California-based company also announced a slew of other cloud features to help boost productivity for technology professionals, including new support for Microsoft’s Windows Server software and for some additional Linux-based operating systems.

Beyond Pricing

The support for Windows Server 2008 R2 may help Google close the gap with rival services, James Staten, an analyst at Forrester Research Inc., said today in a blog post. The company will need more than pricing to help it improve its position in the market, he said.

“Google isn’t a leader in the cloud platform space,” Staten wrote. “You can’t blame Google for using price and claims of performance to lure you in. But both price and performance are fleeting differentiators in the cloud platform market.”

Other big technology companies are also spotlighting their Internet-based tools and investments this week. Cisco Systems Inc. said it plans to spend $1 billion in the next two years on a system for renting computing services over the Internet. Amazon, the world’s largest online retailer, convenes a summit for its Amazon Web Services business tomorrow in San Francisco, according to its website.

Microsoft is holding an event on March 27 in San Francisco, described as “focused on the intersection of cloud and mobile computing.” The Redmond, Washington-based software maker will introduce Office software for Apple Inc.’s iPad tablet with limited capabilities that can be upgraded to premium versions requiring a subscription to the Office 365 Internet-based software, people with knowledge of the announcement said last week.

To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Jillian Ward

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