

Amazon Sees Further Price Drops in Cloud, Pressuring Microsoft - MikeCapone
http://www.bloomberg.com/news/2012-03-16/amazon-sees-further-price-drops-in-cloud-pressuring-microsoft.html

======
shingen
When these guys get within 25% +/- of dedicated hosting on price for what you
get (specifically ram, bandwidth, processor), I'll switch immediately. They
have a long ways to go.

Microsoft makes about as much in profit every 12 days as Amazon does in a
year. I don't think Microsoft is overly worried about margin at this point.
They have a huge incentive to keep the Windows Server environment competitive
in the cloud game.

They mention the only way Amazon will lose pricing power is if someone
undercuts them in the cloud. I don't think that's accurate at all. Amazon is
competing on the bottom side with dedicated hosting providers that give you
twice as much for half the price plus bandwidth, and they're getting better
constantly. I'd swear that Amazon taking some PR beating recently about how
expensive their offerings are, was the primary reason for the EC2 drop. That
comparison basis was mostly against dedicated and self/colo hosting.

~~~
e28eta
I'm just guessing, but I'm not actually sure that Amazon is _that_ worried
about pricing against dedicated hosting. I think they provide a lot of added
value on top of just ram, bandwidth and processor. Not everyone needs or wants
it, but I don't think you should discount it.

~~~
gtaylor
> I think they provide a lot of added value on top of just ram, bandwidth and
> processor

Bingo. This is why we use them. EC2's performance is not great, and the
pricing is only "good" if you reserve instances on a 3-year term. However,
their full suite of services are wonderful. We're not really vendor locked in,
either, because of how we designed our app.

We're willing to pay a premium in order to not have to administer parts of our
stack. For example, Simple Email Service is so cheap and beats the heck out of
running a mail server. We have 0 media servers, because S3/CloudFront do it
wonderfully. We don't need a front-facing proxy EC2 instance, because ELB
works great for our purposes. Background tasks are scheduled with SQS, so we
don't need RabbitMQ or ZeroMQ. Auto-scaling shapes our server fleet
automagically to our traffic.

Point of all of this is, you spend a ton more on salaries. We've been able to
put off hiring because of Amazon's full suite of offerings, which is a huge
win for us.

~~~
wootwoot
Eh, I run a one man shop, deliver on the order of 100k emails a day, and do
most of what you describe on dedicated boxes (redis, queued jobs, mail
server), and it doesn't take that much time to administer. My 4 servers have a
combined 36 3 ghz xeon processor cores, 12 TB of bandwidth, ~80 GB of RAM, and
8 SSD drives totaling 800 GB of flash. They serve about 11 million requests
per day from 100k unique users at an average of 30-40 ms per request. They do
this for less than $3k/month, and I've got about 4x headroom from midday
steady state. It's not as redundant as Amazon's setup, but I've also had less
downtime than EC2 in the last two years. IO is consistent, and almost always
below 10ms. Setup and teardown is a pain, but I almost never have to do it.
I've been able to put off hiring because it's not really that hard due to how
powerful servers are these days. I'll admit to using S3 for picture hosting,
but that's the only one :-)

