Amazon Leads Price War: Drops AWS Pricing Again, Leans Heavy on Reserved Instances

According to Amazon's blog today, the company is now on their 19th price cut since AWS debuted, but who's counting? Well, they are, apparently. The company is lowering pricing on EC2 instances, ElastiCache, Amazon Relational Database Service (RDS) and Amazon Elastic Map Reduce are all dropping significantly. Significantly, Amazon is heavily emphasizing its price cuts on Reserved Instances.

The EC2 pricing is dropping by up to 10% for on-demand instances. If you're consuming Reserved Instances, Amazon is dropping prices up to 37%.

Amazon is also appealing to heavy users with its price cuts, offering volume discounts of 10% for customers that own more than $250,000 of Reserved Instances for additional Reserved Instances. After the $2 million mark, Amazon is offering a 20% discount, and Amazon is asking customers to call if they pass the $5 million threshold.

The prices for RDS are dropping by similar amounts. If you're using on-demand RDS, pricing drops by up to 10%. Amazon has shaved pricing as much as 42% for Reserved Instances of RDS. Likewise, ElastiCache is dropping by up to 10% if you use on-demand instances. (ElastiCache doesn't have reserved pricing on its pricing page.)

What's interesting, aside from the actual price drop, is the emphasis Amazon is putting on the Reserved Instances. By moving more customers to Reserved Instances, Amazon can better plan its capacity needs for the next few years and helps lock customers into using AWS. Companies could switch to RackSpace, Google or another provider – but they'd be losing some significant chunks of change in doing so.

This seems like a pretty smart move on Amazon's part, and I'm wondering how long it's going to take for other providers to introduce something similar. As far as I know, Amazon is the only major player offering this kind of pricing scheme and seems to be handily undercutting the other players.

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Best Buy Clears Way for IPad 3, Drops IPad 2 Price

By Kate Knibbs | Mon Feb 27, 2012 4:07 pm

Best Buy cut the iPad 2's price by $50, an unusual move signaling the iPad 3's release is likely imminent.

Apple expects to reveal the iPad 3 later this week, and Best Buy's gambit, coupled with shipping reports from Foxconn, support speculation that the device is right around the corner.

Apple rarely allows price cuts on its devices by retailers, and Best Buy's generous discount and a similar sale at Meijer point to something big in the works, as the companies' sales reduce current iPad inventory.

"The timing of Best Buy's sale may be yet another indication that the world's most valuable company is getting ready to announce the iPad 3," said Tom Cheredar of VentureBeat.

Apple has not confirmed any specs for its new tablet, but analysts believe it will have the same form factor as the iPad 2, feature a retina display, faster processor and possibly offer LTE capability, a surprise since LTE technology often hurts battery life, a highly valued iPad 2 feature.

The iPad 3 will likely have updated cameras, since many users complained about the poor quality of both the front and rear-facing lenses in the iPad 2.

Apple's latest tablet will hit the market nearly a year after the iPad 2, which dominates the tablet market. In the past year, however, rivals stepped up their tablet offerings and changed key dynamics in the playing field, and competition will likely continue to heat up.

Google just revealed its focused push into the tablet market this year, announcing its intention to rival Apple's popular tablets. The search giant is releasing an Android-branded tablet in April, and the Android-powered Samsung Galaxy Tab and tablet-smartphone hybrid Galaxy Note are experiencing strong sales.

Besides Google, Apple also faces stiff competition from Amazon's Kindle Fire, another Android-powered tablet with a significantly less-expensive price point. Along with Barnes & Noble's Nook Tablet, the Kindle Fire cuts into the iPad's customer base by attracting budget-conscious customers.

Apple is considering releasing a smaller, more affordable iPad to regain that corner of the market, but the project is still in development.

Analysts expect the iPad 3 will debut at the same price as its forerunner, $500 for a 16-gigabyte model, which could widen the gap between the capabilities of Apple's tablet and devices like the Fire and Nook Tablet. By offering the iPad 2 at a reduced price, Apple could position itself with a tablet in two different price categories, making it more competitive.

Some customers will flock to buy the iPad 2 at a lower price, but many will likely hold out for the newer model. The iPad 3 will enter a changed tablet market this time around, but Apple pioneered the market and all eyes will be on its latest offering to see if can continue to compete and innovate, generating big sales and transforming the way people use tablet devices.

Mon Feb 27, 2012 3:31 pm | By
Apple notched a victory over an attempted sales ban on its devices by Motorola, raising more questions over how common technology gets used under intellectual property ownership.



Fri Feb 24, 2012 2:05 pm | By
Proview filed another lawsuit against Apple, expanding the trademark battle to the U.S. and upping the stakes for both companies in the high-profile case.

Fri Feb 24, 2012 11:52 am | By
Apple plans to acquire Chomp, an app search and discovery company, to revamp its App Store and stand out in a crowded marketplace.

Thu Feb 23, 2012 1:49 pm | By
A Shanghai court ruled Apple can continue to sell the iPad in China, as a lawsuit over trademark threatens to disrupt the company's success in the country.

Thu Feb 23, 2012 12:26 pm | By
Tech companies agreed to stronger privacy policies for mobile apps, as scrutiny ramps up among lawmakers and consumer advocates about how apps handle personal information.


Editorials & Opinion By Kate Knibbs
Apple is gearing up for the iPhone 5, while adding improvements to its App store.

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