Amazon has recently announced the availability of spot based pricing that can dramatically reduce the hourly price of cloud computing. While this is not relevant for many scenarios including running user facing apps like production XenApp, it does provide an indication of future pricing models for Cloud infrastructure and its available now. There are restrictions on the new offering but it really does work. I was able to run a new instance of XenApp on Windows 2003 Server for only $.05 per hour, less than half the normal price of $0.12 per hour. This is very useful for test, PoC and potentially scalability testing when your timing can be flexible. Starting a new EC2 instance including the prebuilt AMI images available for the Citrix C3 Lab works without issue, the AWS console provides a few new windows to check the current spot price and allow you to bid your price to start an instance. Currently however there is a significant downside to bidding too low, that is that Amazon will terminate your instance when the spot price exceeds your bid. If your just learning that may be fine, but if you have invested time and resource into a project this could be a big issue. There are some computing tasks that can withstand the impact of terminated instances but this condition does limit the broad appeal of this new pricing model.

When you think about it, this is just like Priceline.com selling unused seats in an airplane or rental cars. It doesn’t make sense for a company to fly with empty seats or leave cars in a lot. Business travelers on a schedule will still pay full price, but others on a tight budget with flexible plans can take advantage of very low temporary prices. Amazon is simply taking a similar excess capacity dilemma and maximizing their return on the capital invested. How well this applies to broad IT tasks is not immediately obvious. However it does point out another example of the economic benefit of scale for Cloud Computing. Aside from using virtualization to maximize images and workloads per server, Amazon can now sell unutilized capacity something that dedicated datacenters can’t even consider.

Cloud Economics 101 Part 1 – Premise vs Cloud vs Colo
Cloud Economics 101 Part 2 – Premise Plus Cloud
Cloud Economics 101 Part 3 – Amazon Reserved Pricing
Cloud Economics 101 Part 4 – Amazon Ec2 vs Terremark vCloudExpress

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