According to Microsoft’s top cloud executive, the period of intense price-based rivalry between Microsoft Azure (AWS) and Amazon Web Services Inc. (Mazda Web Services Inc. (AWS), is effectively over.
Scott Guthrie, the head of Microsoft’s Cloud and Enterprise groups, spoke at the Deutsche Bank Technology Conference in Las Vegas Tuesday. He shared his company’s view on the current cloud market and the “two-horserace,” as he called the battle between Azure and AWS.
AWS and Azure have been locked in a price war for many years. Any announcement of price cuts from one vendor would be immediately countered by the other. Guthrie has admitted that this was part Microsoft’s strategy to compete against AWS.
“We have made a decision with Azure that we will match Amazon’s commodity prices. Guthrie stated that Amazon will match price cuts, which is usually within 48 hours. This was at an industry conference two year ago.
It’s a completely different market today. Guthrie stated at the Deutsche Bank Technology Conference, that price is no longer a distinguishing factor.
He said that “for the most part, [we’re] not competing on price,” to Karl Keirstead, moderator and senior Deutsche Bank research analysts. “I don’t think it’s either one of us against the other. It’s more often that we compete on value, I’d argue at this point. This is a significant difference from, say, two or more years ago, when I thought it was more about cost per virtual machine or storage.
Guthrie stated that customers should find ways to increase the value of low-cost cloud services, such as by enabling greater scaleability.
Guthrie outlined a variety of ways that Microsoft’s cloud compares to AWS. He said that they focused on “a few things with Azure to differentiate.” “We’re No. 2 and strive to be No. 1.”
He gave an example of Microsoft’s recent investments into Internet of Things (IoT), Business Intelligence (BI) as well as security management. Azure’s hybrid capabilities are another example.
He said, “The ability to say to an organization, “You can build apps, run them not only in our cloud, but also in your datacenter or even across the street in AWS’ datacenter and have that hybrid flexibility,” tends to really resonate.” “We are very different in this category. That appeals to the customer target, which are enterprises and ISVs targeting them, I believe.
Guthrie also spoke up Azure’s scale in comparison to AWS and other hyperscale clouds vendors. Microsoft’s recent investments in expanding its cloud footprint have given it 34 datacenter regions, Guthrie pointed out. This is more than the combined totals of AWS (which claims 13 areas) and Google (5). However, each provider’s definition of “region” is different.
He stated, “This kind of global scale is something we fundamentally believe really only very few companies are going to be capable to provide.”
Guthrie claimed that Azure’s geographical reach gives it an advantage in areas such as data sovereignty and privacy.
He said, “We not only have broad coverage in regions but also meet unique data residency guarantees that no other cloud vendor delivers.” “Whether they’re in China, Germany, or for the U.S. government or Department of Defense.
AWS and Azure are by all accounts the market leaders in cloud computing. This fact was noted by Keirstead and Guthrie. Keirstead asked Guthrie what it would take to make other cloud vendors hyperscale. He said that there are many barriers to entry, including billions of dollars in capital expenditures, as well as large numbers of engineers. He said that Google has the potential to enter the market, but it is not yet c