Microsoft will offer Azure by the minute to take on Amazon's cloud
Sometimes the key to getting bigger is making things smaller. At least that's the idea behind Microsoft's plan to offer Windows Azure cloud resources by the minute with no mininum buy-in.
Context & Ripple Effects
This is the pricing chapter of a Microsoft-Azure arc the corpus has tracked since 2007, when CNET first sketched Microsoft's 'Cloud OS' ambitions Cloud OS takes shape. Five weeks ago Bloomberg reported Azure sales topping $1 billion in a year — real but still a rounding error next to Amazon — and back in January 2012 GigaOM noted AWS had already begun offering free Windows on EC2, attacking Microsoft on its own OS turf.
Per-minute billing with no minimum buy-in is Microsoft's answer: it attacks Amazon's hourly metering directly rather than matching it. The story travelled unusually wide for an infrastructure pricing change — TechCrunch, ZDNet, PC World, The Register, eWeek and even Scott Guthrie's own blog all carried it on or about June 3, suggesting Redmond made this a deliberate, coordinated announcement. It also lands amid confirmed reports of Wall Street renewed attention on Microsoft's stock and rumored internal restructuring under Steve Ballmer, with the company's efforts against Apple in mobile described as foundering — making Azure one of the few fronts where Microsoft is playing offense.
First-order effects
- Developers running bursty or short-lived workloads on Windows Azure can now pay only for actual compute consumed instead of being billed a full hour, lowering the cost floor for experimentation and auto-scaling workloads that spin up briefly.
- Amazon faces a pricing asymmetry it did not set: every prospective customer comparing EC2's hourly granularity against Azure's per-minute model now sees Microsoft offering finer metering at no minimum commitment.
Second-order effects
- AWS is pushed toward finer-grained metering of its own — if per-minute becomes the comparison point buyers use, Amazon must either match the granularity or defend hourly billing on other grounds like maturity and ecosystem depth.
- Cloud brokers, resellers and managed-service providers gain margin headroom, because finer-grained billing makes it easier to resell capacity with usage-based markup without absorbing minimum-commitment risk.
Third-order effects
- If granularity keeps ratcheting down across providers, compute starts to be sold like electricity — priced by exact consumption rather than reservation blocks — shifting competitive weight from list price to metering precision, tooling, and the ability to guarantee utilization.
- Pricing granularity becomes a structural wedge for the number-two player: a challenger can differentiate on commercial terms alone when the underlying commodity (virtual machines) is functionally interchangeable, which pressures incumbents to compete on services and data gravity instead.
The trend: Cloud infrastructure is entering a metering arms race in which providers compete on ever-finer pricing granularity, letting challengers like Microsoft attack Amazon on commercial terms where technical parity is close.