Google: The cost of hardware is falling faster than the price of cloud

I think it's storage - the article doesn't say so, but I've heard Google make similar statements before that were in terms of $/MB of disk. It's the price of the raw hardware though; it doesn't take into account any software optimizations like deduplication or compression.

Also, Amazon EC2 Spot Instances are priced on an auction system, so you can get a rough idea of the market-clearing price from the spot price. (With some distortion because Amazon controls the allocation of machines to spot vs. on-demand services.) Currently it's about an order of magnitude lower than on-demand prices, giving you some idea of how much farther prices could fall and what Amazon's profit margins might be.