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Amazon Web Services just made its biggest pricing change in years

CNBC logo CNBC 18/09/2017 Jordan Novet

© Provided by CNBC Public cloud market leader Amazon (AMZN) Web Services on Monday said that on October 2 it will start charging its customers by the second for use of its popular EC2 virtual slices of servers in its data centers.

The move is historically significant. Since AWS became available in 2006, it has charged by the hour. Then, in 2013, Alphabet's (GOOGL) Google, which had introduced its direct competitor to AWS a year earlier, said it would start charging by the minute, after a 10-minute minimum. Microsoft's (MSFT) Azure followed suit shortly thereafter.

Now Amazon is hitting back by becoming even more granular when it comes to making people pay only for the computing resources they use, with a one-minute minimum.

The price change is only applicable for Linux virtual machines, AWS chief evangelist Jeff Barr wrote in a blog post.

While the per-second pricing could mean companies will end up paying less money for certain workloads, the change might also lead companies to be more experimental with their use of EC2 instances for certain types of computing.

It's a classic Amazon move: lowering prices to gain market share.

Microsoft actually introduced one service that charges by the second earlier this year, but it's for working with containers -- a newer technique that's not as widely used as virtual machines.

AWS fetched Amazon a $916 million operating margin on $4.1 billion in revenue in the second quarter of this year. In that quarter, Amazon had 30.3 percent of the cloud infrastructure services market, according to Canalys. It has long been the market leader in the space.

Cutting prices is a common tactic Amazon uses to compete with Microsoft, Google and other cloud infrastructure providers. Other competitive methods include opening more data centers around the globe and introducing new services.

"How can you use it to improve your support for continuous integration? Can it change the way that you provision transient environments for your dev and test workloads? What about your analytics, batch processing, and 3D rendering?" Barr suggested in his blog post.

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