It's a great strategy from Google especially if they think they can match any move from Amazon in this way, and if they can sustain it for a long period of time.
It's basically game theory, and at this point, Amazon would be smart to stop cutting prices just for the sake of out-competing Google on price. And if they do that, Google might also stop doing it, because as in game theory, they know continuing an aggressive price war in this manner is only going to hurt both of them, because they are both very resilient and they won't take each other out in this way anyway.
Amazon, the market leader, trying to beat Google on price, would be like Coca-Cola trying to beat Pepsi on price, and racing to the bottom. Coca-Cola has learned a long time ago that it's okay if Pepsi is slightly cheaper. Same goes for Verizon and AT&T.
I think they will both still continue to cut their prices at a regular time period, as hardware prices fall, but only for the sake of expanding the market and getting new classes of customers that otherwise wouldn't use their services, and not just to try and steal from each other.
It's also not always the case that the leader competes on quality while the followers compete on price. In many industries, being the leader means you have infrastructure advantages and nobody can touch you on price, whereas others must serve smaller markets based on quality. Retail (both online and offline) is a good example. You'd be foolish to suggest that Amazon (the retail side) or Wal-Mart give up competing on price and let their smaller competitors take that mantle.
Overall, I'd say that Google can certainly undercut Amazon on price, but at the cost of reducing the margins that its executives and shareholders are used to seeing. They might see this as a worthwhile tradeoff if they see utility computing as a strategically important space; but personally I don't see that space as a long-term threat to Google in the same way social networks or mobile phones were. But I'm certainly happy to see Google compete here; I benefit as much as any other startup from a price war.
Given that this assertion is mandatory for your argument to hold water, actual numbers to support your claims are required here. And since Google and Amazon don't publicly share this data, where does that leave us?
Amazon is much more accustomed to operating a low-margin
business than Google or Microsoft.
I'm not an expert on ad-supported websites, but they aren't exactly notoriously profitable.
Also, Google has a history shutting down unviable services and as these competitive price cuts continues, it gets more risky to keep betting on Google.
They shut down AdSense and AdWords accounts constantly with no recourse or explanation and customer support is completely non-existant. Giving them control over my hosting as well is far more power than they've proven worthy of having over my business.
Both of their lowest-end devices are limited to 8GB physical (6GB or less after OS) memory, so cloud storage is a key pricing issue for folks comparing a Kindle Fire vs. Nexus 7 (or Nexus 4).
The battle for the non-iPad tablet space looks like it's heating up fast... what's amusing is that pure hardware manufacturers like Samsung or Acer are nowhere to be found because iPad-style tablets require an ecosystem and a) adequate on-board storage and/or b) cloud storage.
It shouldn't matter the company providing the PaaS also happens to sell cheap tablets with their logo on it.
I hope both players go ahead and play. Let's see who wins.
And that's how it should be, before Google, your only option for a smartphone was to pay one company way too much money. Customers directly benefit, and are more productive, so it's basically impossible in the US to prove antitrust against google.
Regardless, your same argument could easily be said about web browsers, and somehow that case happened, so obviously anti-trust actually does work like that, at least in the eyes of the US prosecutors: just like with Internet Explorer, Google has managed to squelch numerous markets where there could have been competitors by being the only player willing to do it good enough for free; for some less obvious examples, think of cases like Google Code, or Google Charts, or even Google Groups (which is still around, but whose only competitor was another free offering from Yahoo! which is largely a laughing stock at this point).
synposis: the antitrust case is at this point ridiculous.
As a formerly poor person who could only afford a G1 and not an iphone, allowing me to rise out of poverty, I'm not angry. The only angry people I know are Apple execs. Consumers are pretty happy about this. Which means the antitrust case is going nowhere.
The Microsoft case was different, Microsoft was found guilty for EOM shenanigans, and Bork, who authored modern antitrust law and thought microsoft was guilty, now thinks there is no antitrust case against Google.
When the FTC is done, they'll be a laughing stock.
If you want to really find a problem, you'll have to look at amazon who is not only selling at cost, they make no profit and have a high P/E since investors think they'll eliminate competition then raise prices.
 - http://www-student.unl.edu/cis/econ321b03/online_course/unit...
 - http://en.wikipedia.org/wiki/Predatory_pricing
> However, because the antitrust laws are ultimately intended to benefit consumers, and discounting results in at least short-term net benefit to consumers, the U.S. Supreme Court has set high hurdles to antitrust claims based on a predatory pricing theory.
So yeah, good luck MS et al. You'll have better luck in the socialist paradise known as the EU.
Google went to $0.095 a few days ago.
S3 went from $0.125 to $0.095 per gig.
Google has undercut again by going to $0.085.
I like this very much. Hey Amazon, I heard Google also called your mamma fat, are you just going to take it?
(dreamobjects only uses one datacenter with the data stored three times, it's not equal to regular S3)
Man, if only there was a single serious App Engine-compatible competitor, prices there would be at the sub-penny level by now given the fair value of that junk. Only it seems designed from the outset for this scenario to never occur, and so why would I trust my future forward compatibility to another of their cloud efforts (or the mercy of their customer support ethos)?
There can be insight there (one great property of startups en masse is that they serve as a great experimental method for proving zanier ideas will work or market segments can exist if a product is made for them), but there does come a point where it's like saying Google's success in AI research is because they spotted AI researchers and snapped them up. Well...yeah, employees usually are hired for the job they were hired for.
Regardless, the original poster's criteria was "Google continues to validate its service not by competing on quality or feature distinction, but by throwing gobs of cash at it", which I think the GP's examples clearly contradict, as all of them have continued to gain quality (for some people's definition of quality) and feature distinctiveness.
To take the tangent further off topic it's interesting to me that Google's greatest successes post-search/ads appear to be these strategic products. Not things that bring direct profits, but those that allow them to influence the major platforms (mobile, web). Committing key resources in this way speaks of long-term thinking that other companies could learn from.
Least of all after witnessing the random price changes with App Engine, there's no reason to believe this low pricing is for the long term, so it's not like this is even good for consumers.
1-click downloads of content, billed immediately without asked for confirmation.
Ads embedded in files you retrieve.
Super saver transfers: transfer charges waived when you store $25 worth of files.
A company creates a service to generate revenue. Google provides numerous free services from which they show advertisements (or crowdsource free labor such as the google voice training system or google image search tagging "game") to generate revenue. Another company might charge for said service but not flood me with advertisements. Both companies make revenue from their service offering.
Why is it okay for Google to shutdown services (which either served their purpose or weren't profitable) but so unspeakable if another company were to do the same for a paid service?
Regardless if you agree with that viewpoint or not, at the end of the day, Google has a long history of creating products, gaining users, and shutting down those products. This history has made it extremely difficult for them to break into a market such as this one because quite frankly nobody trusts that the product will be around very long. The utter lack of customer service also makes it difficult to place faith in their systems.
Amazon also previously had a free consumer-facing search engine, A9; along with a free maps / street view service.
At various times Amazon has experimented with free shipping, including in general in the past, or with a free prime trial, or their free super saver shipping program. Obviously these are incentive based systems that require a purchase to use, but the shipping is still free non-the-less.
They provide, if I recall correctly, around 5gb of free cloud storage for you to upload content to, with an Amazon account.
They provide their Kindle book software across almost every platform at no cost.
Most small developers will stay away from Google. Amazon offers a 12 month tier free. Google offers prices and terms that change with 30 days notice.
The AWS conference is still on with Jeff Bezos talking in half an hour. Anyone care to guess what his response to this may be?
Now there may or may not be other reasons to choose your service (data center in switzerland is appealing) but according to your pricing page, you're only cheaper in a very narrow window.
did, i mean did.. did you graph and solve that mentally while browsing the pricing page?
Comparing to reduced durability of Amazon RRS, it's a nice happy medium between the normal storage and Glacier.
Maybe that would compete with their other offer of Buying Google Drive storage for five times the price.
For reference, Azure's prices for those are 0.0931 and 0.125, respectively. I wonder if they'll be dropped as well in reaction to these changes.
Right now i have a rails app that uses carrierwave to manage images and store them on s3.
All i needed to get s3 set up was two lines of config, a ruby gem, setting some heroku config variables to the api keys.
How easy is it to switch?
Just nitpicking but the author is adding percentages when they clearly should not be.
You are right about the percentages though. 20% + 10% = 32% not 30%. They actually cut a further 8.3%.
It is for this reason I prefer a nice, friendly, slow price war. I guess you could say the kind of price war where it is in fact a product war- price is only one of the many battles being waged.
For public hosting of many smaller objects those gets add up fast.
This is nice because it also helps make it cheaper for startups and product development.
The Confusement of Variable Pricing Throughout the Day
Storage is King
Datacenters are the New Parking Lots
Computation is the Future Occupant