Amazon Web Services (AWS) announced on stage at AWS re:Invent that it has dropped pricing about 25 percent across the board for its S3 storage service. Senior Vice President of Amazon Web Services Andy Jassy said the price drop will go into effect December 1. AWS has dropped prices 23 times since 2006.
Jassy attributed the price drops to what he sees as a virtuous circle that has emerged as AWS has expanded.
More customers leads to more AWS usage, which fuels the need for more infrastructure. As more is added, AWS gets economies of scale in lower infrastructure costs and, as a result, can lower prices.
Jassy said the differences between AWS and its competitors come down to margins. The large, enterprise giants such as Oracle, IBM and HP work on high margins. That has been the way they have historically made their revenues. But now the world is different. The new reality is scale and super-thin profit margins.
The big technology giants of the past are making up for this lack of capability to scale with “private cloud” solutions that are nothing more than an effort to “cloudwash,” a term that refers to the habit of these big tech providers to put the cloud name on its legacy hardware.
AWS still faces steep competition from the likes of Google, which earlier this week lowered its cloud storage costs by 25 percent.