14 DAY TRIAL // Cloud computing, despite the fact that most people still have no real idea what it means, is taking off and on-demand services by the likes of Google and Amazon are becoming increasingly popular with people wanting cheap computing power and storage for their sites or projects. As the market matures, the offerings diversify, following the trend of other markets which use a similar pay-per-use model but are otherwise completely unrelated. Amazon has now released a new product for its EC2 service dubbed Spot Instances which allow users to bid for computing power in an automated auction system to maximize the available capabilities while keeping costs down.
"As customers continued to expand their use of AWS, they started asking if additional pools of capacity were available, even if only for a few hours at a time. Some customers were looking to reduce costs in exchange for being flexible as to when they run their application; others told us they were willing to pay more when they had urgent, high volume needs,” Peter De Santis, general manger of Amazon EC2, said.
“Because of the dynamic nature of supply and demand in the Amazon EC2 environment, we developed Spot Instances to let customers take advantage of our unused capacity while specifying a price they are willing to pay,” he added.
The system isn't overly complicated, users place a bid for an instance based on what they're willing to pay and how urgent their needs are. When the Spot Instance price is lower than their bid, they'll get to access the instance and use it as long as they need it or as long as the price stays below the bid. Regardless of what they bid, they'll be charged based on the Spot Instance current pricing which varies with demand.
This approach is beneficial to the customers but also to Amazon. The company gets to sell its unused capacity at a bigger rate, while users have more flexibility especially when it comes to pricing. It also appeals to several categories of users, on the one hand those doing non time-essential computing can get much cheaper rates while those needing extra capacity at any given point can be assured that they'll get the computing power they need even if they have to pay extra.