Cloud Computing: Amazon Sells Customers On Long-Term Use

Grazed from Information Week. Author: Charles Babcock.

Cloud computing customers tend to view it as a vehicle for absorbing their websites’ or other public-facing applications’ heavy traffic periods. But Amazon appears to be increasingly successful at getting more of them to use it for long-term, steady-state purposes.

The data is skimpy, and Amazon Web Services wouldn’t divulge how much of its business is now based on Reserved Instance versus on-demand servers. On-demand servers are ordered up without prior notice; they start and stop whenever the customer wants. Reserved Instances, available since 2009, are lined up through one- or three-year agreements in exchange for an upfront payment. Reserved Instances don’t have to run continuously for that length of time, although one of the options for purchasing them, heavy utilization, assumes that they run most of the time…

The enticement: customers who use Reserved Instances can routinely save a third of the hourly cost of a similar sized, on-demand instance. Skillful use of Reserved Instances "can save customers up to 71% over on-demand rates. We first launched Reserved Instances based on requests from customers who had predictable, steady-state workloads and wanted to reserve capacity in exchange for lower costs," an Amazon spokesman, who declined to be named, said in an email Oct. 19…

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