Verizon Tries to Patent Spot Pricing for the Cloud

The U.S. Patent and Trademark Office today published a patent application from a division of Verizon Communications for a way to offer market-based spot pricing for cloud computing. The application was filed in October of last year 2008 but published today. It could mean that Verizon plans to offer spot pricing for its cloud computing product, or it could just be the result of another overzealous legal department trying to corner the market on a way of doing business.

If Verizon does plan to offer dynamic pricing, whereby what customers pay for compute time depends on how heavily the company’s cloud infrastructure is being utilized, that could be a good thing for the industry. Amazon in December launched spot pricing for its Elastic Compute Cloud service, and at the time Derrick Harris, a colleague at our GigaOM Pro research service, pointed out that while dynamic pricing was a good thing, Amazon’s huge market share meant that dynamic pricing without a major competitor (sub req’d) wouldn’t drive costs down quickly. Throwing Verizon into the mix could drive competition.

And given that Verizon would be going up against Amazon, perhaps its decision to patent the idea of dynamic pricing makes sense. After all it is Amazon that holds the infamous “1-Click” patent, which allows users to make purchases with just one click and which it used like a cudgel to beat Barnes and Noble at the online retailing game. Perhaps Verizon just didn’t want to be at the wrong end of the patent stick when it faced off against Amazon in the cloud.

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