John Gannon

December 14, 2009 By John Gannon

Cloud computing economics on my mind

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Over the last few days, there have been a couple of interesting developments and posts from the cloud community that have me thinking about the economic ramifications of cloud computing.

Amazon just announced spot pricing for EC2 instances:  Amazon users can now name their price for an EC2 instance and if capacity is available at that price, the instance will be purchased.  Werner Vogels (Amazon CTO) discusses this in more detail on his blog.

Hedging Your Options for the Cloud:  In this GigaOM post, Joe Weinman of AT&T discusses a variety of economic and business models for cloud computing.

Taking pricing models used in other industries (e.g. airlines, hotels, manufacturing, internet advertising) and applying them to the management of clouds makes sense – especially as compute power and application capacity becomes commoditized.  However, there is still much work to be done to achieve the same level of pricing and service granularity in the application world.

For instance, a unit of cloud CPU power or cloud storage is somewhat fungible, and it is fairly clear what you’re purchasing for your money.  On the other hand, trying to appropriately value, sell, or trade a unit of specific application capacity running within an enterprise is not.

For these new pricing models to have the most impact and business value to end users of IT, they’ll need to be viable in the cloud as well within the four walls of the enterprise.

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Category: Cloud Computing

Posted on December 14, 2009 | Permalink | View Comments Subscribe
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