Amazon, at its first developer conference Re:Invent, announced plans for significant price reductions. Amazon Web Services Senior VP Andy Jassy said the cloud supplier will cut storage prices 24% to 27% on Dec. 1.

Soon after making that announcement, Jassy welcomed Netflix CEO Reed Hastings, who had a big smile, to the auditorium stage in Las Vegas. Netflix is a heavy user of Amazon servers to stream video to customers. Hastings said his firm in 2008 used a million hours of streaming time a month. It now uses a billion hours, he said, along with heavy use of Amazon’s Simple Storage Service. The S3 price cut was welcome news for his balance sheet, he told Jassy.

Jassy said the price cuts would be implemented throughout Amazon’s all nine regional data centers. He said Amazon has frequently cut prices because it intends to be a high volume, low margin business. That’s unlike software suppliers used to 60% to 80% gross margins that are now “inserting the word ‘cloud’ into their old product lines,” he said. A traditional software supplier can’t convert to cloud supplier overnight because it doesn’t understand the high volume, low margin business model, he claimed.
Network Computing