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AWS attacks rivals with Amazon Chime pricing

Amazon Web Services is switching Amazon Chime pricing to a usage model to lure businesses away from rivals Slack, Microsoft Teams and Cisco Spark. The new pricing starts in April.

ORLANDO, Fla. -- Amazon Web Services plans to implement an aggressive pricing model for Amazon Chime, charging...

businesses based on how often their employees use the cloud messaging and meetings platform.

Currently, a freemium version of Amazon Chime lets users chat and attend meetings. Businesses must pay $15 per user per month to give a specific group of employees the ability to host meetings.

Starting next month, any user will be able to host a meeting, being charged $3 for every day that they host one, for a maximum of $15 per month. AWS said it expects the new usage-based Amazon Chime pricing model to reduce the bills of virtually all customers.

"It's the AWS way. We like to charge customers for what they use, nothing more, and with no up-front commitments," Collin Davis, the general manager of Alexa for Business, said in a keynote address at Enterprise Connect this week. Alexa is AWS's cloud-based intelligent voice service.

The usage-based Amazon Chime pricing will give businesses more flexibility in how they use the service. Rather than buy licenses for individual users, companies will be able to use Microsoft Active Directory settings and the Chime control panel to control which users host meetings.

AWS is also adding corporate directory integration and screen sharing to the freemium version of Amazon Chime, features that were previously sold as part of a freemium "plus" package for $2.50 per user per month.

The market impact of Amazon Chime pricing

The usage-based pricing model could make Amazon Chime more competitive against rival team collaboration platforms Slack, Microsoft Teams and Cisco Spark, which have larger footholds in the enterprise market. 

The lower price should be "incredibly disruptive" given that competing platforms are often twice as expensive, or even costlier, said Irwin Lazar, an analyst at Nemertes Research, based in Mokena, Ill.

AWS has tried to differentiate Amazon Chime with flexible pricing since launching the service in February 2017. AWS previously allowed customers to prorate the monthly subscription fees of individual users by activating and deactivating accounts mid-month.

In such a crowded market, Amazon needs to do something disruptive in order to gain some traction.
Zeus Kerravala, ZK Research

"In such a crowded market, Amazon needs to do something disruptive in order to gain some traction," said Zeus Kerravala, founder and principal analyst at ZK Research in Westminster, Mass. "And there are two ways to disrupt: one is through innovation, and one is through pricing."

The business model of AWS parent company Amazon has always been disruptive pricing, Kerravala said. AWS, which had nearly $17.5 billion in sales last year, can afford to eat some costs to gain share in the team messaging and meeting market.

Kerravala predicted that AWS would eventually add other features to Amazon Chime that it would be able to charge for on a usage basis. The pricing model makes it less risky for enterprises to adopt the Amazon Chime platform, he said.

"I think [Amazon Chime] will get some looks," Kerravala said. "Some of these platforms can get pretty expensive."

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