Microsoft (NASDAQ: MSFT) is cutting Windows Azure cloud storage pricing, countering recent price cuts at Google Cloud Storage and Amazon Simple Storage Service. For smaller channel partners, the price cuts are a mixed blessing.

Microsoft will cut Windows Azure Storage prices 28 percent, effective Dec. 12, 2012. That follows a March 2012 price cut of 12 percent. Google (NASDAQ: GOOG) made two price cuts last week, and Amazon (NASDAQ: AMZN) made one. Rackspace (NYSE: RAX) weighed in earlier this week, reminding customers to focus on fanatical support coupled with proper pricing.

On the upside, small VARs and MSPs will find it less and less expensive to build backup, disaster recovery (BDR) and other storage services atop the Microsoft, Google and Amazon clouds. On the downside, many channel partners already work with rival cloud storage services, and the price wars could potentially put the squeeze on margins.

Microsoft partners in particular should keep a close eye on how the company links Windows Azure Storage to on-premises Windows Server 2012 deployments. It's clear that Microsoft is trying to inspire customers to back those on-premises servers up to the Azure cloud.

Still, highly specialized BDR solutions -- purpose-built for MSPs and VARs -- remain popular in the IT channel. It's unclear if big public clouds will pressure those smaller BDR players into price cuts, especially since many small business customers don't have a feel for overall pricing in the cloud storage market.