Welcome!

Government Cloud Authors: Carmen Gonzalez, Harry Trott, William Schmarzo, Elizabeth White, Dana Gardner

Related Topics: @CloudExpo, Containers Expo Blog, Machine Learning

@CloudExpo: Article

Amazon EC2 Reserved Pricing Changes the Equation

Cloud Computing Economics Part Three

Ulitzer Cloud Computing Blog

Things are changing fast in the world of Cloud Computing, however one question remains the same. Will it save me money and how much? To follow up on a previous post on Cloud Economics Part One, I looked at a fairly simple example of 5 Servers for a dev/test environment and identified the incremental costs of buying 5 servers and running them on premise or a Colo and then compared that to Amazon EC2. The analysis did not include many variables such as real estate costs and labor savings which may or may not apply to the particular situation. The results indicated that a Premise based deployment could provide the lowest "incremental" cost when compared to EC2 if the servers were running continuously. On the other hand EC2 provided significant savings for short term workloads with no upfront costs.

Purchase - on Premise

$ 15,000    Quad-Core Servers ( 5 x 3,000 each  )

$ 750         1/2 Rack + Gigabit Switch

$ 15,750   Total Hardware cost

$ 5,800     Annual amortized cost, 5% over 3 years

$ 0              Assuming no incremental real estate cost

$ 2,000     Annual power & AC cost

$ 7,800 Total annual cost on premise


Purchase - at Colo

$  8,000    Colo fee's; 1/2 Rack + power + bandwidth

$  5,800    Annual amortized cost

$ 13,800  Total annual cost at Colo


EC2 Cloud

$ 35,040  24x365x5 Amazon EC2 ( $.80 per high CPU Server instance hour )

$  8,320   40 hours x 52 weeks

$    688    40 hours x 4.3 weeks

What has changed recently at Amazon is a new pricing model that provides the option for "Reserved Instances" http://aws.amazon.com/ec2/#pricing which includes an upfront fee ( 1 year or 3 year term ) and a reduced per hour charge. The analysis below reflects the new pricing model applied to the same 5 server scenario as above. As indicated the new model results in a significant savings compared to EC2 standard pricing; 31% for the 1 year term and 48% for the 3 year term assuming the servers are running 24/7. However, when compared to the 40 hour per week scenario the cost at $16,146 ( or $10,229 3 year ) is higher than the EC2 Standard price of $8,320 or the Premise cost of $7,800.

Annual $               Reserved Pricing at EC2

24,162     24x365x5 ( $.80 high CPU ) 1 Year Reservered, $2,600x5 @ 5%
18,245     24x365x5 ( $.80 High CPU ) 3 Year Reservered, $4,000x5 @ 5%
16,146     40 hours x 52 x 5 ( $.80 High CPU ) 1 Year
10,229     40 hours x 52 x 5 ( $.80 High CPU ) 3 Year

So will the Cloud save money? the answer remains the same ... it depends. The new " Reserved Instance" pricing model provides substantial savings over standard pricing when used continuously but the standard pricing still is more effective for short time periods such as a 40 hour week workload. As noted in the earlier posts there are many other variable cost savings by putting workloads in the cloud such as real estate costs, facility upgrades plus the intangible but real benefit of reduced time to develop/test/deploy.


The "Reserved Instance" pricing will also impact the variable workload analyzed in Cloud Economics Part 2 - Premise Plus Cloud scenario, this should provide more content for an upcoming post. 

Cloud Economics Part 1 here.
Cloud
Economics Part 2 here.

More Stories By Chris Fleck

Chris Fleck is Vice President of Emerging Solutions at Citrix Systems. Chris started his career at IBM working across multiple engineering and product organizations leading to Business Unit Exec of the IBM Industrial Computer Group. As a pioneer of new technologies, Chris founded an IBM spin-off to commercialize the initial Server Blade products as CEO of OmniCluster Technologies. At Citrix Chris is responsible for Emerging Solutions and is involved with or leading strategic initiatives at the company. You can follow him on Twitter and his blog at TechInstigator.com

@ThingsExpo Stories
Web Real-Time Communication APIs have quickly revolutionized what browsers are capable of. In addition to video and audio streams, we can now bi-directionally send arbitrary data over WebRTC's PeerConnection Data Channels. With the advent of Progressive Web Apps and new hardware APIs such as WebBluetooh and WebUSB, we can finally enable users to stitch together the Internet of Things directly from their browsers while communicating privately and securely in a decentralized way.
"Tintri was started in 2008 with the express purpose of building a storage appliance that is ideal for virtualized environments. We support a lot of different hypervisor platforms from VMware to OpenStack to Hyper-V," explained Dan Florea, Director of Product Management at Tintri, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Data is an unusual currency; it is not restricted by the same transactional limitations as money or people. In fact, the more that you leverage your data across multiple business use cases, the more valuable it becomes to the organization. And the same can be said about the organization’s analytics. In his session at 19th Cloud Expo, Bill Schmarzo, CTO for the Big Data Practice at Dell EMC, introduced a methodology for capturing, enriching and sharing data (and analytics) across the organization...
Manufacturers are embracing the Industrial Internet the same way consumers are leveraging Fitbits – to improve overall health and wellness. Both can provide consistent measurement, visibility, and suggest performance improvements customized to help reach goals. Fitbit users can view real-time data and make adjustments to increase their activity. In his session at @ThingsExpo, Mark Bernardo Professional Services Leader, Americas, at GE Digital, discussed how leveraging the Industrial Internet and...
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at 20th Cloud Expo, Ed Featherston, director/senior enterprise architect at Collaborative Consulting, will discuss the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
Why do your mobile transformations need to happen today? Mobile is the strategy that enterprise transformation centers on to drive customer engagement. In his general session at @ThingsExpo, Roger Woods, Director, Mobile Product & Strategy – Adobe Marketing Cloud, covered key IoT and mobile trends that are forcing mobile transformation, key components of a solid mobile strategy and explored how brands are effectively driving mobile change throughout the enterprise.
IoT is at the core or many Digital Transformation initiatives with the goal of re-inventing a company's business model. We all agree that collecting relevant IoT data will result in massive amounts of data needing to be stored. However, with the rapid development of IoT devices and ongoing business model transformation, we are not able to predict the volume and growth of IoT data. And with the lack of IoT history, traditional methods of IT and infrastructure planning based on the past do not app...
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place June 6-8, 2017, at the Javits Center in New York City, New York, is co-located with 20th Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry p...
"LinearHub provides smart video conferencing, which is the Roundee service, and we archive all the video conferences and we also provide the transcript," stated Sunghyuk Kim, CEO of LinearHub, in this SYS-CON.tv interview at @ThingsExpo, held November 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA.
Internet of @ThingsExpo, taking place June 6-8, 2017 at the Javits Center in New York City, New York, is co-located with the 20th International Cloud Expo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world. @ThingsExpo New York Call for Papers is now open.
The 20th International Cloud Expo has announced that its Call for Papers is open. Cloud Expo, to be held June 6-8, 2017, at the Javits Center in New York City, brings together Cloud Computing, Big Data, Internet of Things, DevOps, Containers, Microservices and WebRTC to one location. With cloud computing driving a higher percentage of enterprise IT budgets every year, it becomes increasingly important to plant your flag in this fast-expanding business opportunity. Submit your speaking proposal ...
"There's a growing demand from users for things to be faster. When you think about all the transactions or interactions users will have with your product and everything that is between those transactions and interactions - what drives us at Catchpoint Systems is the idea to measure that and to analyze it," explained Leo Vasiliou, Director of Web Performance Engineering at Catchpoint Systems, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York Ci...
WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web communications world. The 6th WebRTC Summit continues our tradition of delivering the latest and greatest presentations within the world of WebRTC. Topics include voice calling, video chat, P2P file sharing, and use cases that have already leveraged the power and convenience of WebRTC.
20th Cloud Expo, taking place June 6-8, 2017, at the Javits Center in New York City, NY, will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud strategy.
Discover top technologies and tools all under one roof at April 24–28, 2017, at the Westin San Diego in San Diego, CA. Explore the Mobile Dev + Test and IoT Dev + Test Expo and enjoy all of these unique opportunities: The latest solutions, technologies, and tools in mobile or IoT software development and testing. Meet one-on-one with representatives from some of today's most innovative organizations
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain. In this power panel at @...
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, discussed the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
The WebRTC Summit New York, to be held June 6-8, 2017, at the Javits Center in New York City, NY, announces that its Call for Papers is now open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 20th International Cloud Expo and @ThingsExpo. WebRTC is the future of browser-to-browser communications, and continues to make inroads into the traditional, difficult, plug-in web co...
"A lot of times people will come to us and have a very diverse set of requirements or very customized need and we'll help them to implement it in a fashion that you can't just buy off of the shelf," explained Nick Rose, CTO of Enzu, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
In 2014, Amazon announced a new form of compute called Lambda. We didn't know it at the time, but this represented a fundamental shift in what we expect from cloud computing. Now, all of the major cloud computing vendors want to take part in this disruptive technology. In his session at 20th Cloud Expo, John Jelinek IV, a web developer at Linux Academy, will discuss why major players like AWS, Microsoft Azure, IBM Bluemix, and Google Cloud Platform are all trying to sidestep VMs and containers...