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Cloud computing grows up with Amazon EC2 Reserved Instances


Amazon just announced a new feature in its EC2 cloud computing infrastructure: Reserved Instances. Reserved Instances enable Amazon Web Services users to reserve EC2 capacity with a one-time advance payment and pay less for ongoing usage, rather than relying entirely on the existing pay-as-you-go model, which the announcement calls a “spot market” for computing capacity.

This is great news for AWS customers for a couple of reasons. For one, they could save quite a bit on the cost of running an EC2 instance—one of the commentators at the original blog post above works this out to be 33% for a one-year commitment. Customers aren’t obligated to run a reserved EC2 instance full time and aside from the one time payment will pay for usage at a lower rate. What then does the one-time payment buy customers? A guarantee from Amazon that the launch of an EC2 reserved instance will succeed. When combined with EC2 availability zones, this gives enterprises a way of doing cloudbursted disaster recovery, which Amazon indeed cites as one of the motivations for EC2 Reserved Instances.

On a somewhat related note, there have been some interesting conversations lately about the effect of the fine-grained pricing models enabled by cloud computing infrastructure on application architecture. Pay-per-use models are breaking the cost impact of application architecture decisions down to levels of detail scarcely seen before in enterprise computing. It used to be that cost-benefit analyses of certain IT architecture decisions could be meaningfully done only in business-critical settings like financial services or telecom, and that too only at a coarse-grained level. With growing comfort around fine-grained costing and usage models (for a recent example, see Diomede Storage’s offering), we’re effectively looking at a future where the CIO and CFO functions in a large enterprise will converge.

All these developments are great for the innovation ecosystem around cloud computing, because it indicates that enterprises are getting more comfortable with a model of computing rather unlike anything that has come before, both on technological and economic grounds. The gold rush to build out cloud infrastructure may only have a few winners, but as enterprises move large swathes of business workloads to the cloud, the Levis of cloud computing are likely to see big business. We are excited about the possibilities this raises in areas like cloud management, offerings for SLA-based IT service providers and cloud costing, among others. Entrepreneurs, rev up your engines and get in touch if we can help you!


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