Amazon's cloud auction

Amazon.com is taking an auction-style approach to selling its core cloud computing service, EC2. In a release today, the company said it will now let customers bid on "unused" EC2 capacity and keep using it until their bid price exceeds the "current Spot price," which Amazon will determine based on market conditions.

Amazon said the bid program is targeted users who have "flexible start and stop times" such as "image and video conversion and rendering, data processing, financial modeling and analysis, web crawling and load testing." This new bidding system is Amazon's latest pricing model for EC2; the company already lets people purchase EC2 on demand and reserve it.

Amazon says the EC2 spot price will "change periodically" based on supply and demand. Amazon web services evangelist Jeff Barr writes in a blog post:

As requests come in and unused capacity becomes available, we'll evaluate the open bids for each Region and compute a new Spot Price for each instance type. After that we'll terminate any Spot Instances with bids below the Spot Price, and launch instances for requests with bids higher than or at the new Spot Price.

Here's more from Amazon CTO Werner Vogels. Cloud users out there, what do you think of the name-your-price model?

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About Eric Engleman

ERIC ENGLEMAN is senior technology staff writer for TechFlash and the Puget Sound Business Journal, covering online retail giant Amazon.com. Engleman tracks Amazon's increasingly complex business, spanning ecommerce, Kindle, cloud computing, and more. He's been covering technology and other industries for the Business Journal since 2003.

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