Amazon tweaks cloud compute pricing to attract big customers |
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Amazon tweaks cloud compute pricing to attract big customers
One of the key questions for Amazon Web Services is whether it can move beyond its early startup adopter base to attract large enterprise customers -- and their big IT budgets. Today Amazon sweetened the pot with a new pricing policy for its EC2 compute service. Companies can now reserve compute power for a one-time payment, and get a discount on the hourly use rate.
The new policy is limited to the U.S. for now and is available only for Linux/Unix operating systems. Under the new pricing model, companies can reserve EC2 for one or three year terms. Reserve rates vary, but for small use scenario, the one-year reserve fee is $325 and three-year reserve fee is $500, with a usage rate of 3 cents per hour, less than the 10 cents per hour for standard spot use.
Amazon has picked up a number of enterprises customers for its cloud-computing business, including Eli Lilly, Autodesk, Nasdaq, the New York Times and the Indianapolis Motor Speedway. But many of them seem to be using the services experimentally for side projects, rather than for core functions. If Amazon wants to grow web services into a bigger business, it has to get more major companies using the services and shifting more essential business functions onto the platform.
That seemed to be on the mind of Peter DeSantis, general manager of EC2, who told ZDNet that the new pricing model helps make the case to big customers. “We had a lot of the feedback from enterprise customers. They want to know that their data centers have boxes when they need them,” DeSantis said. "“These broad options for enterprises appeal to what they are used to."
Amazon executives have been pitching web services as a cost-effective alternative to traditional data centers in these tight economic times. Andy Jassy, the head of Amazon Web Services, recently told me that large enterprise adoption of cloud computing is "happening much sooner than we anticipated." He said ecommerce giant Amazon is committed to the cloud computing business, saying "it’s going to be a very significant free cash flow generating business that’s going to be very meaningful over the long term."
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