Thursday, March 12, 2009

Amazon Discounts EC2 Futures with “Reserved Instances”

Seeking to lock customers into their Elastic Computing Cloud for one-year or three-year periods, Amazon Web Services (AWS) announced today “reserved instances.” Werner Vogels’ Introducing Amazon EC2 Reserved Instances - A way to further reduce IT costs post of 3/12/2009 offers more details .

Prospective EC2 users can go long with a $325 up front charge to guarantee availability and fixed, discounted pricing of a small EC2 instance for a one-year period; a three-year term costs $500. Up-front charges are non-refundable.

Jeff Barr’s Announcing Amazon EC2 Reserved Instances post of the same date compares the hourly costs for 24/7 operation of an EC2 small reserved Linux or Open Solaris instance with this table (Spot Purchase row added):

Term One-Time Fee Hourly Usage Effective 24/7 Cost
Spot Purchase $ 0 $ 0.100 $ 0.100
1 Year $ 325 $ 0.030 $ 0.067
3 Years $ 500 $ 0.030 $ 0.049

The Amazon Elastic Compute Cloud (Amazon EC2) page’s “Pricing” section provides one-time fee and hourly usage charges for Large and Extra Large instances with standard or high CPU ratings.

“Reserved instances” currently are available to U.S. users only and not for Windows/SQL Server instances.

Amazon’s new pricing move puts additional head on Microsoft to disclose initial pricing for the Azure Services Platform and the upgraded SQL Data Services feature.

What’s next in this one-sided price war? Will AWS underwrite business interruption insurance to augment its no-teeth Service Level Agreements (SLAs) that refund usage charges during outages?

Update 3/12/2009 12:00 PM PDT: Geva Perry’s Amazon Reserved Instances: Do They Make Business Sense? post describes his embedded Zoho spreadsheet “calculator that allows you to plug in the number of hours you expect to use the AMI during the year, and will then tell you how much money you will save or lose by using Reserved Instances versus pure On-Demand Instances.”

12:10 PM PDT Larry Dignan’s Amazon tweaks EC2 pricing; Takes next step in its enterprise evolution ZDNet post starts with this lede:

Amazon has tweaked its Elastic Compute Cloud (EC2) pricing model to be more enterprise friendly. The move is significant enough to sway IT executives to adopt more of Amazon’s Web Services–especially when they have tight budgets.

1:00 PM PDT Techmeme adds this post to the Discussion about Larry’s ZDNet article.

5:00 PM PDT Read Jeffrey Schwartz’s response to this post in his Amazon Slashes Cloud Pricing for Those Who Commit article of 3/12/2009 for Redmond Developer News.


Anonymous said...

Roger, what's your thoughts on Amazon offering SQL Server 2008 on EC2 at some stage?