Seems to me the dogs are out in the wild when it comes to cloud wars. Microsoft’s latest announcement refers to a first (and significant) breach in Azure pricing. For the first time since Azure was launched, a significant component of its pricing scheme (inbound traffic) is reduced to zero. From this point of view, perhaps a better title for this post would be “Who Let The Dogs In?” 
It’s interesting to analyze a bit what’s behind this bold decision. First and foremost, it signals to me that Microsoft believes their cloud storage and communications infrastructures are mature enough to cope with the potential data surge resulting from their decision. Second, the decision underlines one key point in their cloud strategy: make cloud storage very attractive and tempt customers to use the cloud to store as much as possible of their data. Third, it eliminates part of the weird case of double taxation for the same service (a cloud customer pays two bills for the data traffic – one to the ISP and one to the cloud provider).
There are several scenarios that are boosted by the decision. Up until now, in US and Europe, the cost of storage was 15 cents/GB/month and the cost of inbound transfer was 10 cents/Gb/month (this is valid for pay-as-you-go offers, but you must be aware there are other offers too, tailored to specific needs). Outbound transfer was priced at 15 cents/Gb/month. All in all, the cost of moving 1 GB of data through the cloud (assuming you keep it there for one month) was 40 cents. With the new pricing scheme, this drops to 30 cents (a 25% decrease).
The reality is that there are scenarios where the real decrease in cost is much more significant. Think about using the cloud storage as a support for your backups. Suppose your backup is a modest () 1 TB/month and your incidents force you to retrieve from backup 1TB/year. Using today’s costs (assume a US or Europe datacenter, basic pay-as-you-go scheme), loading up the backups will cost 12 * 1024 * 0.10 = 1228.80 dollars/year. Keeping that data in the cloud costs you (1 + 2 + … + 12) * 1024 * 0.15 = 78 * 1024 * 0.15 = 11980.80 dollars/year. Finally, getting that 1TB out every year would cost 1024 * 0.15 = 153.60 dollars. This amounts to a grand total of 13263.20 dollars. Eliminating the 1228.80 dollars leads to a 9.2% decrease in cost. Not that much, some might say. True, but if you take a closer look, I assumed above that you will keep all 12 full backups in the cloud. What if you decide to keep only the last full backup? Well, the total cost will be 1228.80 + 12 * 1024 * 0.15 + 153.60 = 3225.60. In this case, the cost reduction is a significant 38%! That’s a big one, by any standard, you have to agree.
Backup is not the only scenario that gets important benefits from this decision. Basically, any scenario where a cloud customer supports the costs of putting data in the cloud while transferring the costs of getting data from the cloud to its own customers (either directly via invoices or indirectly via ads for example) benefits from zero inbound traffic price.
One other interesting thing to watch is what will be the reaction, if any, from Microsoft’s competitors in this game.
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