Microsoft has announced the lowering of prices for its Office 365 plans by up to 20 per cent, in an official blog post.
Kirk Koenigsbauer of the Microsoft Office Division wrote that increases in sales have made the cost to run Office 365 more efficient.
"This is the beauty of the cloud where we can deliver economies of scale through our worldwide data centres and economies of skill with our engineers, administrators, and support teams operating the service," Koenigsbauer said.
The post also revealed Microsoft plans to make pricing changes to its Office 365 for education programs as well. Microsoft will now make its "A2" service plans free to students, as well as faculty and staff.
Cloud services in general are becoming more economical as of late. Companies like Amazon and Google have recently cut the prices of their cloud offerings too.
Clive Longbottom, founder of Quocirca, spoke with IT Pro in greater detail about the cloud economy.
"We're really seeing a level of maturity coming through in the Cloud environment," he said.
Longbottom explained that as the Amazon cloud programs gained popularity, they were put into full run time, which didn't look as cheap anymore. Other companies began offering similar cloud services at lower prices.
"As more and more people do work on cloud technology and it becomes more efficient, you get lower prices with economies of scale," he said.
Longbottom described the situation as a "perfect storm that looks really good for the buyer."
However, Greg Rusu, general manager at Zunicore, is not impressed by Amazon's bargain deals.
"Amazon's recent price drops and its long term incentives indicate that the company is trying to motivate long-term business. However, price is only one short-term lever over performance," he said.
"The Amazon customers we've spoken to seem to consistently point to them as being difficult to use, not performing well and having a high cost of bandwidth between virtual servers. On top of that, they have reported Amazon's lack of capability to integrate with dedicated hardware, its limited OS support and, perhaps more importantly, the fact that they are locked into a deployment because there is no ease of migration from AWS."
Rusu claims that despite the pricing differences Zunicore will come out on top.
"We have attained over 2000 customers so far and will continue to beat Amazon on price and performance."
There is a downside to the increasing price competition in the cloud industry though.
"New entrants will find themselves caught between a rock and a hard place," Longbottom said.
"They wont have the mass economies of scale to compete with the bigger companies. As the big guys continue to lower prices, the smaller guys will have a harder time bringing in new customers. People need to understand that this is the product of simple market economics."
