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Amazon Introduces Bidding For EC2 Compute Time 52

Posted by kdawson
from the if-you-haven't-got-a-penny-a-ha'penny-will-do dept.
ryanvm alerts us to Amazon's beta announcement this morning for what it is calling Spot Instances, which represent a name-your-own-price way of using the elastic compute service. Here is Amazon's documentation on the feature. "For customers with flexibility in when their applications can run, Spot Instances can significantly lower their Amazon EC2 costs. Additionally, Spot Instances can provide access to large amounts of additional capacity for applications with urgent needs." Customers can use the EC2 API to see recent spot prices.
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Amazon Introduces Bidding For EC2 Compute Time

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  • Permutation city (Score:4, Interesting)

    by Brian Gordon (987471) on Monday December 14, 2009 @10:58PM (#30439688)

    Reminds me of:

    and civilisation has accumulated vast amounts of ubiquitous computing power and memory which is distributed internationally and is traded in a public market called the QIPS Exchange (QIPS from MIPS, where the Q is Quadrillions)

    Great book. http://en.wikipedia.org/wiki/Permutation_city [wikipedia.org].

  • nifty (Score:2, Interesting)

    by Anonymous Coward

    if only i needed more cpu power for something..

  • Instance creation? (Score:2, Interesting)

    by afidel (530433)
    Last I had heard if you wanted to create more than a couple dozen new VM instances at a time you needed to get custom quotes from Amazon, with this metering in place I assume they have worked out those provisioning problems?
    • by emcron (455054) on Monday December 14, 2009 @11:36PM (#30439960)
      It's not a matter of getting custom quotes -- they just want to know what you're intended use is going to be. The price tiers (I believe) remain the same. It's a basic check to try to limit malicious users who would spawn thousands of instances for spam or other nefarious purposes.
    • There's no custom quote for increasing the instance limit - it's just a safety to prevent someone with a stolen credit card from spawning enough instances to use up all available capacity. You just put in a request and have it lifted; pricing stays the same.
    • by Anonymous Coward on Monday December 14, 2009 @11:44PM (#30440020)

      Initially when you get your EC2 account, it is limited to 20 concurrent VMs. You then have to request to have this limit increased, but the same pricing applies (at least up to 200 concurrent VMs)

      Having accounts limited to 20 VMs means that a single user can't sign up and start to flood the system. Also they make no guarantees that a request to start up a VM will succeed unless you have a reserved instance, which has a yearly cost attached.

      What this spot pricing does is provide a financial incentive for customers to move load to off peak times rather than adding to the load during peak demand. This in turn should flatten out the load on EC2 (depending on how much load can and will be moved to the off peak times).

      In the end this is simple supply and demand economics, and a lot of people in academia have been carrying on about this and a "cloud marketplaces" for quite some time...

    • No, the limit for On Demand instance creation is still 20 instances per account (but it is allowed by amazon TOS to create multiple accounts, hint hint).

      The limit for Spot instances (the kind described in the summary) defaults to 100 per account.

      As you note above, you can get that limit raised by Amazon, upon request.

  • by teknopurge (199509) on Monday December 14, 2009 @11:24PM (#30439890) Homepage
    I wonder if amazon overestimated the uptake of EC2 and needs to have a fire-sale to get _some_ income on the investment. They need to have capacity to service new orders but by default this means that they have un-used resources that are costing them more then the unit bring in.
    • by afidel (530433) on Monday December 14, 2009 @11:37PM (#30439970)
      Considering that the 3 year cost of a Double Extra Large Instance 34.2 GB of memory, 13 EC2 Compute Units (4 virtual cores with 3.25 EC2 Compute Units each), 850 GB of local instance storage, 64-bit platform is $36k and that the 3 year TCO for such a machine in my environment today would be about $8k I don't think they are losing money on EC2 unless their utilization is *really* low, but this does allow them to maximize utilization (and profit) as it allows near perfect price discrimination. It also allows them to scale *their* resources for things like cyber monday by bumping these low priority jobs off the cluster and using it to run their own dynamic site.
      • by Slashdot Parent (995749) on Tuesday December 15, 2009 @10:34AM (#30443828)

        3 year TCO for such a machine in my environment today would be about $8k

        Ahh, but what would the 1 hour TCO for that machine? And how quickly could you get me 100 of them? And what if after a week, I don't need them anymore. Do I have to continue paying for them?

        What if I need 1000? But only for a few days? Can you even fit 1000 in your data center?

        EC2 is for elastic computing needs. The price will never compare favorably to static computing on a 3-year basis.

        By the way, your 8k is very low compared to what you'd have to pay to get the same featureset of Amazon Web Services. What happens if your data center catches fire? How quickly could you get that machine up and running in a new data center, and at what cost? How quickly could you upgrade the storage? Backup online to fault-tolerant storage? Clone that machine?

        What if I want to to load testing of my application? Can you get me a full copy of my production environment and let me quit paying for it once my load testing is done? How much would that cost?

        What about staging my application before production deployment? Do I have to pay a full year for a server I plan on using for like 100 hours of that year, tops?

        Bottom line: There are a many use cases that call for elastic resources. Comparing EC2 with an ordinary server makes no sense, because they are different tools for different jobs.

        • by maxume (22995)

          I think his point was more that they are setting prices in a way where they aren't losing money (they do eventually have to have actual hardware somewhere, which is where the cost comparison comes in).

      • It also allows them to scale *their* resources for things like cyber monday by bumping these low priority jobs off the cluster and using it to run their own dynamic site.

        The EC2 systems are completely separate from the systems that run amazon.com. (According to a seminar on EC2 by Amazon folks I attended at an NYLUG meeting in October.)
      • by lonecrow (931585)
        I guess you were using the "on-demand" pricing. If you use a reserved instance on a 3-year term you start at $4900 + $0.42/hour. I think this works out to only $15,937 over the three years which is less then half the $36k you quoted.

        I am looking at a single smaller machine. My current dedicated server is ~$200/month. Thats about $7.5k over 3 years. The equivalent EC2 reserved instance is only $350+$0.03/hour. That's $788 total for 3 years or a tenth of the price! Sounds like a hot deal to me :)

        Of
    • I don't know if they _need_ the income, but I'm sure they have plenty of excess capacity from reserved instances that aren't running for starters, not to mention the pool for on-demand instances. It's just a smart business move to try to exploit this.
    • Re: (Score:3, Insightful)

      I suspect that we'd have to watch the prices pretty closely to find out.

      Variable pricing(down to the point where electricity costs make it cheaper to just turn them off and suck up the losses, of course) is completely logical for dealing with any unused capacity, and it can't have cost Amazon all that much to hack this pricing scheme into their existing system.

      If there is usually some capacity available, with a small discount in exchange for having no availability guarantee(or even implication), with
    • by enoz (1181117) on Monday December 14, 2009 @11:42PM (#30440014)

      In order for EC2 capacity to be highly available (I haven't yet heard of people waiting in a queue for hours for an instance), it seems obvious that Amazon must have a large amount of computing power in standby.

      This process of auctioning off the extra processing power based on fluctuating capacity seems like a win-win situation for Amazon AND users. Users who want increased processing, but are not time-bound, can get "off-peak" rates. Meanwhile Amazon can make money off the "idle" processors which are still available to be reserved as an EC2 instance.

      • In order for EC2 capacity to be highly available (I haven't yet heard of people waiting in a queue for hours for an instance), it seems obvious that Amazon must have a large amount of computing power in standby.

        They do, since they have to be able to handle peak loads around Christmas and so forth. It just makes good financial sense to make some money off of all that infrastructure when it's not in use.

        • by dkf (304284)

          [Amazon] do, since they have to be able to handle peak loads around Christmas and so forth. It just makes good financial sense to make some money off of all that infrastructure when it's not in use.

          There's this great myth that Amazon need all this capacity for handling Christmas. They don't. It may have started that way, but now their infrastructure for handling services is much larger than that. (IIRC, they passed that level sometime last year, or maybe even back in 2007.) They are now a cloud provider that happens to sell stuff (books, etc) on the side.

          • Re: (Score:1, Informative)

            by Anonymous Coward
            >  They are now a cloud provider that happens to sell stuff (books, etc) on the side.

            If I'm reading their SEC filings correctly, 54% of their sales revenue comes from books and movies, 43% from electronics and random crap, and 3% comes from cloud computing.

            Looks to me like they're very much still a retailer, albeit one who has started selling off compute capacity.
          • by xenocide2 (231786)

            And you don't think their clients suffer from Christmas peak loads? Even if you don't sell things, it's a time of year with a lot of vacation time.

    • Re: (Score:3, Interesting)

      by NeilO (20628)

      No, I don't think so. More likely they already own outrageous capacity to handle the December retail crunch but don't use anything close to that capacity in any other month of the year. So I doubt there's any additional investment in capacity for EC2. EC2 utilizes what Amazon already owns.

      If you read Werner's blog entry on this new feature you'll see they reserve the right to interrupt a Spot Instance and essentially restart it later on. You need to make sure whatever you're doing with that instance you

    • by Sulphur (1548251)

      Are you predicting rain? If so how much compute power did it take?

  • Since an EC2 server not running an EC2 instance is literally burning cash for Amazon (depreciation value, electricity, maintenance, building cost, etc.) being able to sell surplus time like this through a secondary market that allows Amazon to recoup value for the EC2 instances at a minimum price is brilliant, of course the infrastructure needed to support EC2 let alone is pretty staggering, no wonder EC2 is stomping everyone with their insane flexibility.
  • I thought the main benefit of "elasticity" was remove "peak usage" as a primary buying factor. If you have a routine that can run, well whenever, then is EC2 any cheaper than using whatever is sitting around unused in your shop already? The cloud may be a useful resource, but the size & speed of the cloudrush has been overestimated by the entire freakin' industry. By the time it gets sorted and a mature market develops, Microsoft, Amazon, and whomever else will be taking write-downs on all the obsole
    • I thought the main benefit of "elasticity" was remove "peak usage" as a primary buying factor.

      That's certainly a benefit.

      If you have a routine that can run, well whenever, then is EC2 any cheaper than using whatever is sitting around unused in your shop already?

      Possibly not, but if you've already built an infrastructure around EC2, you may not have stuff sitting around your shop intended for that use, and it may make more sense to leverage EC2 for the occasional task of this type, if Amazon provides pricing

  • hackers will going to drive up the price of using the EC2 cloud.

  • by MancunianMaskMan (701642) on Tuesday December 15, 2009 @09:06AM (#30442926)
    seems it would be be a brilliant way to marked mobile data bandwith as well: when the cell is not too busy and neither it the upstream link, they can sell it off cheap and people can facebook all they like (while i read /.), and when the traffic heats up i still have my work email going but the web2.0rhea flow is temporarily halted.
  • This is the same way that electricity is sold between providers -- on 6-minute interval bidding arrangements.

    Of course, today only Amazon is providing the service.

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