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Microsoft signals cloud cash grab is over as it pushes more cost-effective Azure VMs

Just as everyone looks to optimize what they spend for computing services

Microsoft is previewing two new Azure general-purpose virtual machines that will give organizations running compute-intensive workloads more options for balancing costs and performance.

The Azure Dlsv5 and Dldsv5 VMs are addons to the Dv5 and Ev5 VMs, which went live in November. The pitch was to offer better price-performance for general-purpose and memory-intensive jobs by being both scalable (up to 96 virtual CPUs) and running on Intel's Xeon Platinum third-generation (Ice Lake) hyperthreaded processors.

Similarly, both of the new VMs run on third-generation Xeon Platinum 8370C chips in hyperthreaded configurations. However, the new VMs offer less memory (2GiB RAM) per vCPU than the Dv5, at 8GB.

"Customers running compute-intensive workloads will find a better price-performance combination on Dlsv5/Dldsv5 vs. Fsv2 and can potentially reduce their Azure consumption costs," Andy Jia, senior product manager, wrote in a post this week.

Temporary storage is another area Microsoft is working to bring down costs. In the Dlsv5, that means not having any, so enterprises running applications that don't need it aren't spending the extra money. The Dldsv5 sizes offer temporary storage for workloads that need low-latency and high-speed storage, including those that demand fast reads and writes to temporary storage or temporary storage for data caching, according to Jia.

The new VMs can offer organizations as much as 30 percent more performance and price-performance than the Azure Fsv2 VMs, he wrote.

Both can scale from two to 96 vCPUs, four to 32 data disks, and two to eight network interface controllers (NICs).

All this talk about cost savings and price-performance improvements comes as Microsoft and other cloud vendors see the boon that accelerated during the pandemic run up against current economic realities. That has executives from Microsoft, as well as rivals Amazon Web Services and Google Cloud, talking about customers "optimizing" digital spending rather than growing it.

Brian Olsavsky, CFO at Amazon, said earlier this month while discussing the company's latest quarterly financials that the spending slowdown began in the third calendar quarter – and continued in Q4 – as "enterprises of all sizes evaluated ways to optimize their cloud spending in response to the tough macroeconomic conditions."

Microsoft CEO Satya Nadella had similar sentiments in late January, adding that "organizations are exercising caution given the macroeconomic uncertainty" and theorized they also may be holding tighter to their purse strings given that "the next major wave of computing is being born as we turn the world's most advanced AI models into a new computing platform."

Microsoft announced that while revenue from cloud services grew 7 percent in the most recent quarter, executives expect growth for Azure and related products to slow from 35 percent to as much as five points lower.

McKinsey and Co. in November 2022 outlined ways organizations can reduce cloud costs, warning that the 20 to 30 percent growth in cloud spending that some companies are seeing is unsustainable.

Microsoft is hoping enterprises will see the new Dlsv5 and Dldsv5 VMs as one way to make money. The public preview is available in 40 regions through the Azure portal or CLI. During the public preview, the new VMs will be available only via pay-as-you-go pricing and not through Spot Virtual Machines or Reserved Virtual Machine Instance pricing.

Jia also noted that the VMs are not yet populated in the Azure portal and will appear as "unavailable." The problem will be fixed during the preview period, but until then organizations should be able to provision them as usual and will be billed accordingly.

If Microsoft's latest solution to trim Azure costs doesn't go far enough, readers may be interested in the developing story at 37Signals, formerly Basecamp, which made a decision last autmun to quit the public cloud and is spending some more months working through that process. ®

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