Amazon 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.”