Lydia LeongAmazon’s announcement du jour is “reserved instances” for EC2.
Basically, with a reserved instance, you pay an up-front non-refundable fee for a one-year term or a three-year term. That buys you a discount on the usage fee for that instance, during that period of time. Reserved instances are only available for Unix flavors (i.e., no Windows) and, at present, only in the US availability zones.
Let’s do some math to see what the cost savings turn out to be.
An Amazon small instance (1 virtual core equivalent to a 1.0-1.2 GHz 2007 Opteron or Xeon) is normally $0.10 per hour. Assuming 720 hours in a month, that’s $72 a month, or $864 per year, if you run that instance full-time.
Under the reserved instance pricing scheme, you pay $325 for a one-year term, then $0.03 per hour. That would be $21 per month, or $259 per year. Add in the reserve fee and you’re at $584 for the year, averaging out to $49 per month — a pretty nice cost savings.
On a three-year basis, unreserved would cost you $2,592; reserved, full-time, is a $500 one-time fee, and with usage, a grand total of $1277. Big savings over the base price, averaging out to $35 per month.
This is important because at the unreserved prices, on a three-year cash basis, it’s cheaper to just buy your own servers. At the reserved price, does that equation change?
Well, let’s see. Today, in a Dell PowerEdge R900 (a reasonably popular server for virtualized infrastructure), I can get a four-socket server populated with quad-cores for around $15,000. That’s sixteen Xeon cores clocking at more than 2 GHz. Call it $1000 per modern core; split up over a 3-year period, that’s about $28 per month. Cheaper than the reserved price, and much less than the unreserved price.
Now, this is a crude, hardware-only, three-year cash calculation, of course, and not a TCO calculation. But it shows that if you plan to run your servers full-time on Amazon, it’s not as cheap as you might think when you think “it’s just three cents an hour!”
Category: Infrastructure Tags: Amazon, Cloud, hosting
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1 Amazon announces reserved instances | The Black Ball March 12, 2009 at 11:36 am
[...] the original post: Amazon announces reserved instances Share and [...]
2 Cloudology* › Amazon Introduces Inelastic Cloud March 16, 2009 at 1:19 pm
[...] It’s interesting to note that the cost savings ratios are exactly the same for all 5 instance sizes/prices (standard small/large/extra-large and high CPU medium/extra-large), perhaps providing hints of Amazon’s underlying cost structure. By guaranteeing “there’s no chance of encountering any transient limitations in EC2 capacity” for reserved instances, Amazon is — at least implicitly — promising not to over-sell available reserved capacity, so the fixed-cost portion of the price should approximate Amazon’s margined TCO for a server (scaled by how they define a “Compute Unit” and the number of Compute Units provided by the instance type). Hint or not, the announcement is providing more fodder for those arguing the nitty-gritty of the costs of external clouds vs. DIY (e.g., see Gartner’s Lydia Leong’s cautionary post). [...]