AWS explains it as follows: "As soon as you have active Reserved Instances with total list price of upfront fees totaling more than $250,000 in a single AWS Region, you will automatically receive a 10% discount on both upfront and hourly fees for all future Reserved Instance purchases in that AWS Region, and those discounts will continue to apply to new Reserved Instances as long as you continue to qualify for the discount tier."
For both companies, customers have to be using the cloud a lot to get a discount. In Google's case, 25% of the month, in AWS's case it's more than $250,000 worth of spend.
Analysts like Mueller say this practice is about more than just offering customers loyalty discounts. It's about changing the profile of workloads that make economic sense to run in the cloud. Making cloud pricing more competitive with on-premises hardware for static workloads will chip away at price being a reason not to use the cloud.
In reality, though there are many factors beyond just price as to why a company will or will not use the cloud. Factors such as security, architecting applications for the cloud, integration of cloud systems with existing workloads and a host of other considerations still need to be taken into account.
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