This week Microsoft has the pleasure of hosting thousands of developers from all over the world at our Build conference in San Francisco. They don’t travel because they like airline food. They travel because they recognize we’re in the early stages of a platform shift and want to influence the next generation of technology. I’ve yet to meet a developer who travels just to hear about pricing updates, so you won’t see us take the stage at Build and use the opening moment to announce a price cut. This isn’t retail; innovation matters. I’ll cover pricing right here, right now.

Consistent with our previously announced commitment to match Amazon on prices for commodity services, we are cutting prices on compute by up to 35% and storage by up to 65%. We recognize that economics are a primary driver for some customers adopting cloud, and stand by our commitment to match prices and be best-in-class on price performance.

While price is important, and something that will continue to grab headlines, there are three key factors at play in cloud computing: innovation, price, and quality. Innovation and quality will prove far more important than commoditization of compute and storage. Vendors will ultimately extol their track records for building and running services far more than their prices and SLAs.

Microsoft will continue to focus on bringing our customers a world-class service with an unrivaled user experience. This means best-in-class value while still providing the most complete cloud experience on the market. It means massive investments in cutting-edge infrastructure and world-class R&D. It means continuing to grow our developer and partner ecosystems. Simply put, it means devoting the bulk of our efforts to delivering innovation and a quality experience for our customers, developers, and partners.

With the pricing announcements out of the way, we can get back to innovation and quality. See you at Build!

Pricing / Offer Changes and Details:

Virtual Machines

On April 3, we will introduce a new tier of General Purpose Instances called “Basic” (A0-A4) that offers similar machine configurations as the Standard tier of instances offered today (Extra Small [A0] to Extra Large [A4]). These instances will cost up to 27% less than the corresponding instances in use today (which will now be called “Standard”) and do not include load balancing or auto-scaling, which are included in Standard. These instances are well-suited for production applications that do not require the Azure load-balancer (“bring-your-own load balancer” or single instance), development workloads, test servers and batch processing applications. Basic instances will have similar performance characteristics to AWS’s equivalent instances while the Standard instances will maintain their favorable performance. The Basic instances become available for use starting April 3^, and comprehensive pricing information will be available on the Virtual Machines Pricing Details.

Additionally, we are reducing our Memory-Intensive Instance (A5-A7) prices by up to 35% for Linux instances and up to 27% for Windows instances, effective May 1. We will also make available a Basic Tier for Memory Intensive Instances in the coming months.

Storage

We are reducing our Block Blob storage pricing by up to 65% for LRS and up to 44% for GRS, effective May 1.

We are also delighted to announce a new redundancy level for Block Blob storage, called Zone Redundant Storage (ZRS) that will be made available in the coming months. Today, customers use our Geo Redundant Storage (GRS) to keep their data durable in two regions hundreds of miles apart from each other, where we store an equivalent of 6 copies of the data (3 in each region). With the introduction of ZRS, we provide a new redundancy option that keeps your data durable by storing an equivalent of 3 copies of your data across multiple facilities. These facilities may be within the same region or across two regions.  ZRS will be priced 37.5% lower than GRS as it becomes available.

Regional Pricing

Part of this update includes moving to region-specific pricing.  We recognize that some workloads require specific placement while others are not as dependent on location.  This approach will help customers save additional money for workloads that have deployment flexibility.

The table below lists the updated prices and how Azure compares to AWS.

Virtual Machines

General Purpose A1 – A4:

Table below lists prices for Basic A1, cost relative to Standard A1, and comparison to the most comparable AWS instances. Note that configuration parameters for Azure instances and AWS instances are not necessarily a perfect match, but this is intended to provide a helpful comparative view for our customers. A2, A3, A4 prices are 2x, 4x, 8x of A1, respectively.

Memory Intensive A5 – A7:

Table below lists prices for Standard A5, % reduction, and comparison to the most comparable AWS instances. Note that configuration parameters for Azure instances and AWS instances are not necessarily a perfect match, e.g. Azure A5 instance provides similar compute power with slightly less memory (Azure 14 GB RAM vs. AWS 17 GB RAM).

A6 and A7 are 2x and 4x of A5, respectively.

Storage (Block Blobs)