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JP Morgan Reacts To Google's Cloud Pricing War With Amazon

JP Morgan Reacts To Google's Cloud Pricing War With Amazon

Google Inc (NASDAQ: GOOG) (NASDAQ: GOOGL) just escalated its cloud computing pricing war with, Inc. (NASDAQ: AMZN), slashing its prices by 30 percent. The price cuts are primarily large for small instances, with the Micro instance now costing just $0.006 per hour. High CPU instances will see cost reductions of just 5 percent, while Standard instances will see cuts of 20 percent.

However, JP Morgan's Rod Hall said the highlight of the announcement is the launch of Google's preemptible instances, which is meant to directly compete with Amazon Web Services' spot instances. The preemptible instances are jobs that run using idle resources, which can then be suspended if those resources are needed elsewhere.

Related Link: A $127 Billion Opportunity Coming In Cloud Computing

Hall also noted that there is one clear loser in the Google, Amazon public cloud push: Cisco Systems, Inc. (NASDAQ: CSCO). Specifically, Hall said that JP Morgan believes "public cloud computing solutions will get increasingly consumable by SMBs, driving further movement away from branded hardware solutions like Cisco."

In the latest quarterly report, Amazon said that AWS generated $1.57 billion in revenue in Q1, more than its four largest competitors combined, according to data from Synergy Research Group. Google's cloud platform revenue grew by 74 percent in Q1, according to the same report.

Year-to-date, Google has underperformed the market, gaining just 1.1 percent compared with a 7.2 percent increase in the Nasdaq. Amazon has shot higher by 37 percent, while Cisco gained 7 percent.

Latest Ratings for GOOG

Aug 2020UBSMaintainsBuy
Jul 2020Raymond JamesMaintainsOutperform
Jul 2020Deutsche BankMaintainsBuy

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