Amazon.com, which dropped prices on its internet-based cloud-computing service this month, says it will keep cutting when it can, putting pressure on competitors such as Microsoft.
Customers of Amazon's EC2 service, which lets clients run their programs on the online retailer's server computers, saw price cuts of as much as 37 per cent on March 5, and other Amazon cloud service prices were trimmed as well. Microsoft responded a few days later with reductions on its rival Azure services.
"We expect prices to be lower and lower over time, and load volumes to be higher and higher," says Adam Selipsky, a vice-president at Amazon Web Services.
Amazon has lowered prices 19 times in the six years it has sold Amazon Web Services, which has gained customers as more companies seek to run and store applications in outside data centres instead of maintaining the servers themselves.
As they tussle over price, narrower profit margins may be tough to swallow for both companies.