Amazon tests tricky spot market for cloud

Amazon Web Services

Amazon is sticking its toe into tricky new waters: It’s building a spot market for cloud computing resources with a new plan to let users buy and sell their Amazon cloud resources. This is tricky because previous attempts to navigate these waters haven’t done much. Enomoly tried a variation of this plan  and Verizon has a patent for it, but there’s not been much traction.

But then again, Amazon knows a bit about cloud computing and a lot about online marketplaces, so things may go better. For companies that may have over stocked Amazon EC2 reserved instances, there’s now a way out: You can sell off your excess capacity on a new Amazon marketplace.

Amazon  reserved instances are less expensive than on-demand instances , but they’re sold on 1- and 3-year commitments and, as we all know, computing needs can change dramatically. This marketplace will facilitate reserved instance transactions between buyer and seller. Amazon will charge the seller a 12 percent service fee, according to the Amazon Web Services blog.

Here’s the deal, according to the blog:

If you have excess capacity, you can list it on the marketplace and sell it to someone who needs additional capacity. If you need additional capacity, you can compare the upfront prices and durations of Reserved Instances on the marketplace to the upfront prices of one and three year Reserved Instances available directly from AWS. The Reserved Instances in the Marketplace are functionally identical to other Reserved Instances and have the then-current hourly rates, they will just have less than a full term and a different upfront price. Transactions in the Marketplace are always between a buyer and a seller; the Reserved Instance Marketplace hosts the listings and allows buyers and sellers to locate and transact with each other.

The marketplace might be of interest to companies who booked reserved instances in one AWS Region, but needs to move them to another. Or perhaps the application has (in AWS terms) put on a little weight and needs a larger instance type.

Amazon is seeing increased competition on many fronts — from new OpenStack clouds coming online from Rackspace and others, from ProfitBricks, which just launched in the US and lets companies pay for their compute resources by the minute rather than the whole hour. In  addition there’s a flock of companies — Newvem, Cloudability, Cloudyn, etc.– offering services to help companies better plan their use of AWS computing, cutting back on over provisioning.  Amazon is nothing if not proactive when new competition comes online.

Feature photo courtesy of  Flickr user Will Merydith

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