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Rackspace lowered cloud storage prices for volume customers Friday, and it will lower prices on its network bandwidth and content delivery services in a bid to compete more strongly with Amazon Web Services and Microsoft's Windows Azure services.

Rackspace reduced pricing 33%, from $0.18 to $0.12 per GB, for moving data and content over its Rackspace Cloud network and the Rackspace content delivery network (CDN). Enterprises and online information services use CDNs to pre-distribute key content to Internet servers around the world, owned by CDNs such as Akamai or Edgecast, so that response times to users seeking that content will come from a server close to them. When content is downloaded from a server in the same region as the user, response times can be cut by a third or half. Among cloud service providers, Rackspace CDN competes with Amazon's CloudFront and Microsoft's Windows Azure CDN.

Rackspace customers won't see the reduced bandwidth pricing in their bills until their current monthly bill has rolled over into a new billing period.

At the same time, Rackspace implemented a storage price reduction, effective Feb. 22. The entry level price of $0.10 per GB for the first TB remains the same. But if you are a volume user, the price declines after the first TB. Rackspace used to maintain the $0.10 per GB, regardless of volume. "We wanted to incentivize larger customers" to use more storage, said Rackspace CTO John Engates.

Under the new pricing plan, the next 49 TB are $0.09 a GB; the next 150 TB, $0.085; the next 300 TB, $0.08; the next 524 TB, $0.075. Anyone seeking more than 1,024 TB may contact Rackspace to negotiate a price.

[ Want to learn more about how to compare cloud price structures? See Why Cloud Pricing Comparisons Are So Hard. ]

The reduction still leaves Rackspace a little higher than Amazon Web Services S3 or Google when it comes to storage costs. Amazon cut prices on its S3 storage service Dec. 1 by 24-27% and Google followed, positioning its storage service just below Amazon's. Amazon moved from $0.125 to $0.095 per GB for the first TB. Google moved from $0.095 to $0.085 per GB for the first TB.

Engates pointed out that Rackspace, while slightly higher, uses a simpler pricing model than some of its competitors and contains no "hidden" charges, such as a fee for hard-to-predict calls to the storage API or I/O charges.

Microsoft's CDN has a charge of $0.01 for each 10,000 transactions on the CDN and $0.15 per GB for each GB of data transferred from a U.S. or European location into the network.

Amazon charges $0.12 a GB for the first 10 TBs for data transfers into its CloudFront service in the U.S. It also charges $0.0075 per 10,000 HTTP requests.

Engates said Rackspace doesn't levy such charges. "These charges can add up. Customers don't know how many I/Os they're going to have during the coming month," he said. I/O charges may not hurt firms that tend to deal in large files, but the frequent transfer of small files can penalize a business with I/O charges that add up.

"We've taken everything out that customers won't recognize up front. We don't want customer surprises. We don't want to get into the game of 'nickel and diming' customers," he said.