GCPLive Google has dramatically lowered its cloud prices far below those of its rivals – as the search kingpin seeks to eradicate the fat profit margins of the cloud industry.

The web giant announced today at its Google Cloud Platform event in San Francisco a 68 per cent price drop across the board for Google Cloud Storage – as El Reg told you over a week ago – along with a 32 per cent cut in on-demand compute pricing, and an 85 per cent price cut for its Big Query data analysis engine.

Google's new cloud storage prices are as low as $0.026 per gigabyte as a flat rate, far below Amazon's lowest offering of $0.037 per gigabyte, which kicks in if you're holding terabytes of data in the AWS cloud.

The advertising giant noted that cloud prices across the industry were falling by about 6 per cent each year, whereas hardware costs were falling by 20 per cent. And Google didn't think that was fair.

"Together we are resetting the price curve in the cloud to where it should be," explained Google's cloud king Urs Hölzle. "This is a philosophy. The price curve of virtual hardware should follow the price curve of real hardware."

It also introduced a new automatic price reduction called "sustained-use discounts" that will lower prices for customers further as they use Google's services more – a service that directly takes on Amazon's reserved instances.

This means that "if you have a 24/7 workload that you use for an entire month like a DB instance then in effect you get a 53 percent price discount over today's prices," we're told.

The Google Cloud Platform competes with services from rivals Amazon and Microsoft, along with various second-tier operators such as Rackspace, Joyent, Tier3, Savvis CenturyLink, Verizon Terremark, and so on.

Like Microsoft, Google woke late to threat posed by Amazon Web Services and, also like Microsoft, has invested heavily first in platform services like Google App Engine, and then infrastructure tech like Google Compute Engine, to help it catch up.

Since then, Google has become competitive on both a performance and pricing standpoint with its chief rivals, but has failed to develop the expansive set of services and associated ecosystem that Amazon and, to a lesser extent, Microsoft can call their own.

With these changes on Tuesday, Google has instantly become the cloud leader in terms of price by a wide, wide margin. The graph below illustrates how Google has today stepped over the competition just in terms of cloud compute server RAM cost per gigabyte:

Google versus the world ... we'll bring you more comparison graphs as soon as we can (click to enlarge)

"Rates are lower than everywhere else," Hölzle said today.

And he's right. Amazon will have to dig deep to battle Google for business now and developers will reap the proceeds of this brutal margin-destroying war. ®