Cloud pricing wrinkles and tea in China
As you’ve probably heard, Amazon Web Services reduced their on-demand cloud prices significantly last week. You’d think customers would be happy across the board, but that’s not the case. Here’s why, and what will happen as a result. As discussed previously, AWS customers translate their capacity planning into Reserved Instance purchases, based on the relative savings these RIs provide over on-demand prices. But, when on-demand prices are reduced without a corresponding reduction in the instance-hour price for RIs - as happened last week - the RI breakeven point shifts and upsets the optimal RI coverage calculus. AWS customers who purchased RIs before the price reduction can find themselves stuck with inventory that now costs more per hour, in amortized terms, than the cost if they had not purchased the RI. I have several clients in this situation, and none are very happy about it. ...