Microsoft Cutting Azure Pricing For Enterprises, But Some Say Overall Costs Could Rise

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Microsoft, in a bid to get more enterprises using its Windows Azure public cloud and away from the low-cost wiles of Amazon Web Services, is rolling out new Azure volume licensing discounts for enterprises next month.

Microsoft's Azure pricing under its Enterprise Agreement will be "significantly lower than AWS' prices on commodity services like compute, storage and bandwidth," a spokesperson told CRN earlier this week.

When Microsoft said in April that Azure had hit the $1 billion mark in sales, it also vowed to match Amazon's frequent AWS price cuts. Now, Microsoft is backing that up with action and showing its resolve not to allow Amazon to run away with the public cloud infrastructure as-a-service market.


[Related: Microsoft Stakes Its Claim As Top Dog In Enterprise Cloud Market]

But while Microsoft partners welcome the Azure price cuts, their enthusiasm is tempered by a new EA licensing program, called the Server and Cloud Enrollment. The SCE will launch on Nov. 10 and could amount to a significant price hike for customers, according to licensing experts.

SCE is replacing two existing Enterprise Agreement programs, the Enrollment for Application Platform (EAP) and Enrollment for Core Infrastructure (ECI), which are being retired.

With less than a month to go before SCE goes into effect, enterprises that are eligible to renew their EAP and ECI agreements are rushing to do so, one source familiar with the matter told CRN.

"Many clients are renewing the old agreements right now, which gives them three more years" at the EAP and ECI terms, said the source, who requested anonymity because he's not authorized to speak on company matters.

SCE includes core infrastructure, application platform and developer platform components. Customers that choose any of these three will get Azure at the best prices "based on their infrastructure spend," a spokesperson for Microsoft, Redmond, Wash., said in an email earlier this week.

EA customers will also be getting better terms with Azure than they've had in the past.

In the old EA model for Azure, customers commit to buying a certain amount of capacity up front in order to get volume discounts. This was tricky, sources told CRN, because if customers didn't consume all of the capacity within the year, they wouldn't get discounts for the unused portion.

If they went over their commitment, Microsoft would bill them at the full, non-discounted rate, which in some cases amounted to a hefty overage charge.

NEXT: The Impact of Licensing Changes

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