Google’s cloud plan? Undercut all the cloud companies!

SAN FRANCISCO — Google wants to make its burgeoning public cloud into a standard for developers everywhere. Today it took more steps toward that goal by lowering prices.

Prices dropped by 32 percent for Google cloud services in all regions. On-demand costs are now lower than the three-year reserve prices from other cloud providers. Storage now costs 2.6 cents per gigabyte. The BigQuery service for running SQL-like queries on data saw an 85 percent price reduction.

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And Google introduced “sustained-use discounts,” which lowers prices by the minute once engineers use a virtual machine — a slice of a physical server in Google’s cloud — for more than 25 percent of the month.

“Together, we are really resetting the price curve in the cloud to where it should be,” Urs Hölzle, Google’s senior vice president for technical infrastructure, said at a Google cloud event in San Francisco today.

The idea is to bring cloud pricing fall at a similar rate of hardware price changes. Hardware has witnessed commoditization in recent years in line with Moore’s Law.

These are big challenges to Infrastructure as a Service (IaaS) leader Amazon Web Services and other vendors in the market, including Microsoft and Rackspace. And Google’s going-out-of-business-mattress-store-style price cuts come as all these services become more popular.

Google insists its cloud pricing will continue to fall, too.

“This isn’t a one-time step. This is a philosophy: The price trend off virtualized hardware should follow the price trend of real hardware. So it should follow Moore’s Law.”