Amazon cloud offering eBay auction-style pricing

Amazon's cloud computing division is unveiling an eBay-style auction service, which will let users bid on unused virtual server capacity to lower the cost of running applications on the Elastic Compute Cloud.

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Amazon's cloud computing division is unveiling an eBay-style auction service, which will let users bid on unused virtual server capacity to lower the cost of running applications on the Elastic Compute Cloud.

Known as "Spot Instances," the price of this cloud-based server capacity changes based upon supply and demand, unlike Amazon's usual fixed prices for server instances.

"With Spot Instances, customers bid on unused Amazon EC2 capacity and run those instances for as long as their bid exceeds the current Spot Price," Amazon said.

"The maximum price you specify is not necessarily the price that you will pay. For example, if you specify 50 cents as your maximum price and the Spot Price is 30 cents for the period, you will pay only 30 cents. If the Spot Price increases, you will pay the new price (until it exceeds your maximum, at which time your instances will be terminated)."

Amazon, whose EC2 service suffered a power outage taking customer instances offline last week, offers several types of Linux- and Windows-based virtual servers of varying sizes.

Since Spot Instances can be terminated without warning, once a customer is outbid, they shouldn't be the only source of capacity allocated to enterprise applications that need 24/7 uptime.

"Spot Instances are well suited for applications that can have flexible start and stop times such as image and video conversion and rendering, data processing, financial modelling and analysis, Web crawling and load testing," Amazon said.

Spot Instances come in the same sizes and software types as fixed-price virtual servers. Amazon says it developed the auction-style system in response to customers who said they wanted additional capacity at lower cost, and were willing to be flexible about when they run their applications.

Amazon Spot Instances appears to be "the first step on a large scale towards 'market pricing' for computing based on offer and demand," the company RightScale, which provides services around the Amazon cloud platform, wrote in its official blog.

Spot pricing is not intended for all types of workloads. "It should be clear from the way the spot pricing functions that this is intended for transient compute capacity," the company said.

"For your database instances you should carefully stay with the on-demand or reserved instances, but for late night batch jobs where it doesn't matter whether they run a bit earlier or later the spot pricing can save quite some money."

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