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Amazon Reduces Prices on Cloud Services Amid Competition

Amazon.com Inc. (AMZN) cut prices for its Web-based services, a day after rival Google Inc. (GOOG) did the same, stepping up competition among the companies in cloud computing.

The Internet-based services let customers use computer power or storage space on machines in Amazon’s data centers. Amazon said today at a conference in San Francisco that prices for its S3 storage service, which is used by customers including Netflix Inc., will be reduced by about 51 percent. The prices of other services will be lowered on average by 28 percent to 61 percent, depending on the product.

The Seattle-based company also rolled out a service to give users a desktop-like computing experience through any Internet-connected computer or tablet, eliminating the need to use a particular machine for accessing specific applications like Microsoft Office. The service, called Amazon WorkSpaces, has been in testing since November and will be available to customers of Amazon Web Services starting today, the company said.

The price cuts and new product heat up competition in the cloud-computing space, which Gartner Inc. said would reach $131 billion last year. Amazon’s cloud business is five times larger than the next 14 competitors combined, Gartner said last year. The cloud-computing systems have proved popular because they give companies and government agencies the ability to build out their Internet sites without buying their own hardware and pay Amazon based on how much computing power they use.

Google, Cisco

Google yesterday cut prices on some Internet-based services for businesses by 30 percent or more. Cisco Systems Inc. earlier this week said it plans to spend $1 billion over the next two years on a system for renting computing services over the Internet. Microsoft is holding an event tomorrow focused on “the intersection of cloud and mobile computing,” the company said.

Andy Jassy, senior vice president for Amazon Web Services, downplayed the price cuts, saying that “lowering prices is not new for us. It’s something we do on a regular basis.” The company has cut prices 42 times for its Web services, he said.

Customers who use Amazon Web Services include established companies including General Electric Co. and BP Plc, Amazon said The service, now 8 years old, also is used by many technology startups like Pinterest Inc. and Flipboard Inc., which have tapped in to Amazon’s data centers instead of buying and configuring their own servers and equipment.

Amazon also said today that Amazon Web Services received provisional security authorization from the U.S. Department of Defense, giving more government agencies the ability to use the service.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

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

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