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Amazon EC2 Inches Closer To Corporate Customers

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logo_aws.gifAmazon Web Services, a cloud computing subsidiary of Amazon (s AMZN), today introduced a new variation of its EC2 service, Reserved Instances, that comes with a new pricing model. The new offering, which requires a one-time payment to reserve compute capacity and lowers hourly charges, is targeted at larger enterprise customers. It is a move that will allow the company to take a bite out of the traditional data center business.

The cost per instance per year is $425 $325 for an annual contract and $500 for a three-year contract. Usage is charged at about 3 cents per hour, vs. the current 10 cents per hour. At those prices, Amazon estimates that companies can save up to 50 percent on the current pricing model. When I asked Peter De Santis, general manager of Amazon EC2 ,if this was a move targeting the large enterprises, he said, “We want to offer the cheapest possible compute, and that is of interest to large enterprise customers.” He went on to add that Amazon’s customers now don’t have worry about paying for boxes, data centers and their maintenance. “Now customers can choose to reserve capacity as if they owned the hardware.”

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6 Responses to “Amazon EC2 Inches Closer To Corporate Customers”

  1. This is a very interesting offer.
    It seems that it tries to compete with services that are based on Parallels offering which offer VPS for very cheap prices per month.
    It is a great step in the right direction, but enterprises will need more from amazon to really run the mainstream IT.
    * Better windows support ( very limited right now )
    * Improved security
    * More visibility on performance (current small instances are really slow)
    * Better support for standards to run multi-tier applications

    again, right step in the good direction.

  2. Derrick Harris

    I’ve heard several enterprises express an interest for guaranteed CPUs in EC2, even if it meant entering into a contract of some sort. For example, if retailers offload holiday demand to EC2 (as Amazon hopes they will), they want to guarantee their needs will be met. Amazon, obviously, has realized this longing for a while, so I’m happy to see they finally took a step in the right direction.

  3. And, if I did my math right, the actual time to start saving money is about 194 days for the 1yr reservation and 298 days for the 3yr reservation. So, it’s really a bit over 6 months and not 4 months as I incorrectly stated.

  4. Doesn’t seem to me that this feature is necessarily more important for corporate/enterprise customers than for other types of customers.

    I just bought my first reserved instance for my own personal use. If you want to run a server on EC2 for long periods of time (over 4 months in a year) reserved instances save you money. I think everybody likes saving money :)

    Some other corrections: The up front cost for one year is $325 (not $425) and the cost for three years is a one time charge of $500 (not “per year” as implied by the start of the sentence).